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Introduction of soft budget constraint to analyze public administration reforms. Some evidence from the Hungarian public administration reform

Rosta, Miklós (2015): Introduction of soft budget constraint to analyze public administration reforms. Some evidence from the Hungarian public administration reform.

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Abstract

Public management reforms are usually underpinned by arguments that they will make the public administration system more effective and efficient. In practice, however, it is very hard to determine whether a given reform will improve the efficiency and effectiveness of the public administration system in the long run. Here, I shall examine how the concept of the soft budget constraint (SBC) introduced by János Kornai (Kornai 1979, 1986; Kornai, Maskin and Roland 2003) can be applied to this problem. In the following, I shall describe some steps of the Hungarian public administration reforms implemented by the Orbán government from 2010 onward and analyze them, focusing on which measures harden and which ones soften the budget constraint of the actors of the Hungarian public administration system. In the literature of economics, there is some evidence-based knowledge on how to harden/soften the budget constraint, which improves/reduces the effectiveness and hence the efficiency of the given system. My conclusion is that the concept of SBC can significantly contribute to public management studies by deepening our knowledge on what public administration reforms lead to a more efficient and effective public administration system.

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