Conflicts of interest within hierarchic government organizations regarding the importance of fiscal discipline create the need for institutions that curb the bargaining power of units in charge of implementing policy and align their incentives to the interests of the whole organization. We...

Central government bailouts of local governments are commonly viewed as a recipe for local fiscal indiscipline, as local governments learn that the center will come to the rescue in times of trouble. Little is known however about whether such tendencies can be dampened if assistance is...