We investigate whether privatization, competitive forces, and hardening of budget constraints have yet begun to play efficiency-enhancing roles in Russia. The empirical work is based on information from a 1994 survey of privatized and state-owned Russian firms, together representing around 10...

This paper makes some selective comparisons of the empirical evidence relating to financial discipline and soft budget constraints in the enterprise sector in China and the transition countries of Central and Eastern Europe and the former Soviet Union (CEEFSU). The paper finds that: (1) in both...

Financial variables such as cash flow and cash stocks are robust and quantitatively important explanatory variables for investment at the firm-level. A large body of recent empirical work attributes these findings to capital market imperfections. This interpretation is controversial, however,...

There is a widespread view that inflation or inflationary expectations are the only way to overcome the zero lower bound on interest rate. This article shows that this is not true. It is shown that a tax-subsidy scheme can be used to overcome the zero lower bound on interest rate—without...

We show that in the presence of cross-ownership associated with an improvement of production inefficiency of the public firm, the optimal privatization policy is full privatization whether budget constraints are imposed on the public firm. For reaching a higher level of social welfare, the...

We demonstrate an inherent conflict between ex ante efficient monitoring and liquidation decisions by outside claimholders. We show it can be useful to commit to inefficient liquidation when monitors fail to produce information: this provides stronger incentives to monitor. The implication for...

The largest challenge of the Spending Review is not to identify the processes and procedures of the Public Administration that need to be modified, simplified or cancelled in order to reduce costs and spur growth, two things that Italy desperately needs. The true challenge is to guarantee the...

The present paper studies the problem on multi-dimensional mechanisms in which the buyer’s taste and budget are his private information. The paper investigates the problem by way of a canonical mechanism in the traditional one-dimensional setting: function of one variable, the buyer’s taste....