THE ASYMMETRIC TYPE OF ECONOMIC EQUILIBRIUM AND SOFT BUDGET CONSTRAINTS
Abstract
The article considers asymmetric information in its relation to the type of economic equilibrium and the problem of the soft budget constraint, using the planned economy of the former USSR as the main example. In the article, it is supposed that the market with asymmetric information should be characterized by asymmetric arrangement of the curves of supply and demand. In its turn, such an assumption is connected with another hypothesis, according to which the curves of supply and demand describe the dispersion of prices, which characterizes a relevant market. On the basis of this dispersion (probabilistic) approach to using the neoclassical curves of supply and demand, it is proposed to consider the soft budget constraints at a macro level. The SBC that characterizes the centrally planned economy is in accordance with an asymmetric arrangement of the curves under consideration. The situation of comparatively hard budget constraint corresponds to the classical symmetric crossing of the curves of supply and demand, which also characterizes the market economy. Also, for the case of the market economy, the shift of the curve of the aggregate demand (primarily under the influence of credit expansion) in the less elastic position is related with both phenomena – the expansion of the soft budget constraint syndrome and a weakening of macroeconomic stability. In turn, this process is accompanied by a growth of asymmetry of information and a process of adverse selection in an economy. The latter means, for example, the growth of financial bubble and of the share of those investments (and economic actors), which have a predominantly speculative nature and, in particular, are not connected with technological innovations that favour the growth of productivity in the whole economy.
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