This study examines the effect of the hardening of the budget constraint on the investment behaviour of Italian state owned enterprises (SOEs). It carries out a natural experiment that exploits the 1987 shift of budget regimes due to the pressure of European Union economic policies on the...

This paper contributes to the literature on the role of decentralization in hardening the budget constraint of public enterprises. Following Qian and Roland the study adopts a ‘federalist’ approach. However, it interprets federalism as the upward devolution of domestic economic policies to a...

This paper studies the effect of the hardening of the budget constraint on the behaviour of public enterprises. Drawing from finance theory, we provide empirical evidence of a change in behaviour of public enterprises between soft and hard budget constraint regimes by investigating the financial...