This paper analyses the impact of funding source of the bailout on the softness of the regional budget constraint. We show that the funding source of the bailout has a considerable impact both on the credibility of the federal government's commitment and on the regional opportunistic behaviour....

This paper analyses the impact of both the nature of regional public spending and the federal government’s fiscal tools on the softness of the regional budget constraint and the regional provision of public good. We show that i) whatever the nature of regional public spending, the regional...