Details

Autor(en) / Beteiligte

• Schroder, Philipp J H

Titel

The fiscal constraint to restructuring firms in transition economies

Ist Teil von

• Atlantic economic journal, 2000-03, Vol.28 (1), p.37-47

Ort / Verlag

New York: International Atlantic Economic Society

Erscheinungsjahr

2000

Quelle

PAIS Index

Beschreibungen/Notizen

• Restructuring transition enterprises has been slow. Many firms remain unprivatized and the new owners take inadequate measures. A structural barrier is identified at the government level: The government designs the privatization program which leads to restructuring. However, transition governments are in a fiscal squeeze because restructuring relocates costs from firms to the public budget. Nevertheless, the deficit should be kept within narrow limits. This problem is analyzed within a stylized dynamic model. It is found that the fiscal constraints can delay or halt privatization. Careful sequencing of policy and a low ratio of wage-to-profit taxes can remedy the problem.