Public Investment, Growth and Fiscal Constraints Challenges for the EU New Member States Edited by Massimo Florio Professor of Public Economics and Jean Monnet Chair of Economics of European Integration and Head, Dipartimento di Scienze Economiche, Aziendali e Statistiche, Universita...

This paper analyzes how subnational governments allocate own resources between current spending and infrastructure investment and decide on borrowing under the expectation of federal bailouts. It is assumed that states' borrowing possibilities increase with the expectation of such bailouts...