Soft budget constraints in a dynamic general equilibrium model

This paper considers an overlapping generations model in which capital investment is financed in a credit market with adverse selection. Lenders’ inability to commit ex-ante not to bailout ex-post, together with a wealthy position of entrepreneurs gives rise to the soft budget constraint syndrome, i...

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Fecha de publicación:
2010
Institución:
Universidad del Rosario
Repositorio:
Repositorio EdocUR - U. Rosario
Idioma:
spa
OAI Identifier:
oai:repository.urosario.edu.co:10336/10800
Acceso en línea:
https://doi.org/10.48713/10336_10800
http://repository.urosario.edu.co/handle/10336/10800
Palabra clave:
Economía financiera
Inversiones de capital::Modelos Econométricos
Empresas::Valoración
Administración financiera
Riesgo (Economía)
Ciclo económico
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id EDOCUR2_735383d0727a3607dadd20831f1346cb
oai_identifier_str oai:repository.urosario.edu.co:10336/10800
network_acronym_str EDOCUR2
network_name_str Repositorio EdocUR - U. Rosario
repository_id_str
spelling Soft budget constraints in a dynamic general equilibrium modelEconomía financieraInversiones de capital::Modelos EconométricosEmpresas::ValoraciónAdministración financieraRiesgo (Economía)Ciclo económicoThis paper considers an overlapping generations model in which capital investment is financed in a credit market with adverse selection. Lenders’ inability to commit ex-ante not to bailout ex-post, together with a wealthy position of entrepreneurs gives rise to the soft budget constraint syndrome, i.e. the absence of liquidation of poor performing firms on a regular basis. This problem arises endogenously as a result of the interaction between the economic behavior of agents, without relying on political economy explanations. We found the problem more binding along the business cycle, providing an explanation to creditors leniency during booms in some LatinAmerican countries in the late seventies and early nineties.Universidad del RosarioFacultad de Economía2010-032015-09-16T14:41:33Zinfo:eu-repo/semantics/workingPaperhttp://purl.org/coar/resource_type/c_804235 páginasRecurso electrónicoapplication/pdfDocumentoGilles Romero, E. (2010). Soft budget constraints in a dynamic general equilibrium model. Bogotá: Universidad del Rosario, Facultad de Economía.https://doi.org/10.48713/10336_10800 Universidad del Rosario, Facultad de Economíahttp://repository.urosario.edu.co/handle/10336/10800Aghion, Philippe; George-Marios Angeletos; Abhijit Banerjee and Kalina Manova (2005). “Volatility and Growth: Credit Constraints and ProductivityEnhancing Investment”. Mimeo. AprilAzariadis, Costas and Shankha Chakraborty (1999). “Agency Costs in Dynamic Economic Models”. The Economic Journal, Volume 109, April, pp 222-241. hancing Investment”. Mimeo. AprilBergara, Mario; Jorge Ponce and Leandro Zipitr´ıa (2003). “Institutions, Soft Budget Constraints and Bankruptcy”. Montevideo, Uruguay. Mimeo. July.Berglöf, Erik and G´erard Roland (1997). “Soft budget constraints and credit crunches in financial transitions”. European Economic Review, Volume 41, pp 807-917.Bernanke, Ben and Mark Gertler (1989). “Agency Costs, Net Worth, and Business Fluctuations”. American Economic Review, Volume 79, No. 1, March, pp 14-31.Dewatripont, Mathias and Eric Maskin (1995). “Credit and Efficiency in Centralized and Decentralized Economies”. Review of Economic Studies, Volume 62, Issue 4, October, pp 541-555.Kornai, Janos (1986). “The Soft Budget Constraint”. Kyklos, Blackwell Publishing, vol. 39(1), pages 3-30.Kornai, Janos (1998). “The Place of the Soft Budget Constraint Syndrome in Economic Theory”. Journal of Comparative Economics. Volume 26, pp 11-17.Kornai, Janos; Eric Maskin and G´erard Roland (2003). “Understanding the Soft Budget Constraint”. Journal of Economic Literature, Volume 41, No. 4, December, pp 1095-1136(42).Mitchell, Janet (2000). “Theories of Soft Budget Constraints and the Analysis of Banking Crises”. Economics of Transition, Volume 8 No. 1, March, pp 59-100.Vaz, Daniel (1999). “Four Banking Crises: Their Causes and Consequences”. Revista de Econom´ıa del Banco Central del Uruguay, Volume VI, No. 1, June.instname:Universidad del Rosarioinstname:Universidad del Rosarioreponame:Repositorio Institucional EdocURspahttps://ideas.repec.org/p/col/000092/006885.htmlhttp://purl.org/coar/access_right/c_abf2Gilles Romero, Enriqueoai:repository.urosario.edu.co:10336/108002021-06-03T00:46:36Z
dc.title.none.fl_str_mv Soft budget constraints in a dynamic general equilibrium model
title Soft budget constraints in a dynamic general equilibrium model
spellingShingle Soft budget constraints in a dynamic general equilibrium model
Economía financiera
Inversiones de capital::Modelos Econométricos
Empresas::Valoración
Administración financiera
Riesgo (Economía)
Ciclo económico
title_short Soft budget constraints in a dynamic general equilibrium model
title_full Soft budget constraints in a dynamic general equilibrium model
title_fullStr Soft budget constraints in a dynamic general equilibrium model
title_full_unstemmed Soft budget constraints in a dynamic general equilibrium model
title_sort Soft budget constraints in a dynamic general equilibrium model
dc.subject.none.fl_str_mv Economía financiera
Inversiones de capital::Modelos Econométricos
Empresas::Valoración
Administración financiera
Riesgo (Economía)
Ciclo económico
topic Economía financiera
Inversiones de capital::Modelos Econométricos
Empresas::Valoración
Administración financiera
Riesgo (Economía)
Ciclo económico
description This paper considers an overlapping generations model in which capital investment is financed in a credit market with adverse selection. Lenders’ inability to commit ex-ante not to bailout ex-post, together with a wealthy position of entrepreneurs gives rise to the soft budget constraint syndrome, i.e. the absence of liquidation of poor performing firms on a regular basis. This problem arises endogenously as a result of the interaction between the economic behavior of agents, without relying on political economy explanations. We found the problem more binding along the business cycle, providing an explanation to creditors leniency during booms in some LatinAmerican countries in the late seventies and early nineties.
publishDate 2010
dc.date.none.fl_str_mv 2010-03
2015-09-16T14:41:33Z
dc.type.none.fl_str_mv info:eu-repo/semantics/workingPaper
dc.type.coar.fl_str_mv http://purl.org/coar/resource_type/c_8042
dc.identifier.none.fl_str_mv Gilles Romero, E. (2010). Soft budget constraints in a dynamic general equilibrium model. Bogotá: Universidad del Rosario, Facultad de Economía.
https://doi.org/10.48713/10336_10800
Universidad del Rosario, Facultad de Economía
http://repository.urosario.edu.co/handle/10336/10800
identifier_str_mv Gilles Romero, E. (2010). Soft budget constraints in a dynamic general equilibrium model. Bogotá: Universidad del Rosario, Facultad de Economía.
Universidad del Rosario, Facultad de Economía
url https://doi.org/10.48713/10336_10800
http://repository.urosario.edu.co/handle/10336/10800
dc.language.none.fl_str_mv spa
language spa
dc.relation.none.fl_str_mv https://ideas.repec.org/p/col/000092/006885.html
dc.rights.coar.fl_str_mv http://purl.org/coar/access_right/c_abf2
rights_invalid_str_mv http://purl.org/coar/access_right/c_abf2
dc.format.none.fl_str_mv 35 páginas
Recurso electrónico
application/pdf
Documento
dc.publisher.none.fl_str_mv Universidad del Rosario
Facultad de Economía
publisher.none.fl_str_mv Universidad del Rosario
Facultad de Economía
dc.source.none.fl_str_mv Aghion, Philippe; George-Marios Angeletos; Abhijit Banerjee and Kalina Manova (2005). “Volatility and Growth: Credit Constraints and ProductivityEnhancing Investment”. Mimeo. April
Azariadis, Costas and Shankha Chakraborty (1999). “Agency Costs in Dynamic Economic Models”. The Economic Journal, Volume 109, April, pp 222-241. hancing Investment”. Mimeo. April
Bergara, Mario; Jorge Ponce and Leandro Zipitr´ıa (2003). “Institutions, Soft Budget Constraints and Bankruptcy”. Montevideo, Uruguay. Mimeo. July.
Berglöf, Erik and G´erard Roland (1997). “Soft budget constraints and credit crunches in financial transitions”. European Economic Review, Volume 41, pp 807-917.
Bernanke, Ben and Mark Gertler (1989). “Agency Costs, Net Worth, and Business Fluctuations”. American Economic Review, Volume 79, No. 1, March, pp 14-31.
Dewatripont, Mathias and Eric Maskin (1995). “Credit and Efficiency in Centralized and Decentralized Economies”. Review of Economic Studies, Volume 62, Issue 4, October, pp 541-555.
Kornai, Janos (1986). “The Soft Budget Constraint”. Kyklos, Blackwell Publishing, vol. 39(1), pages 3-30.
Kornai, Janos (1998). “The Place of the Soft Budget Constraint Syndrome in Economic Theory”. Journal of Comparative Economics. Volume 26, pp 11-17.
Kornai, Janos; Eric Maskin and G´erard Roland (2003). “Understanding the Soft Budget Constraint”. Journal of Economic Literature, Volume 41, No. 4, December, pp 1095-1136(42).
Mitchell, Janet (2000). “Theories of Soft Budget Constraints and the Analysis of Banking Crises”. Economics of Transition, Volume 8 No. 1, March, pp 59-100.
Vaz, Daniel (1999). “Four Banking Crises: Their Causes and Consequences”. Revista de Econom´ıa del Banco Central del Uruguay, Volume VI, No. 1, June.
instname:Universidad del Rosario
instname:Universidad del Rosario
reponame:Repositorio Institucional EdocUR
instname_str Universidad del Rosario
institution Universidad del Rosario
reponame_str Repositorio Institucional EdocUR
collection Repositorio Institucional EdocUR
repository.name.fl_str_mv
repository.mail.fl_str_mv
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