CERGAS Seminar "Hardening sub-national budget constraints via administrative subordination: the Italian experience of regional recovery plans"

Different mechanisms to harden the budget of sub-national governments to avoid deficits in decentralized settings are discussed in literature. After attempts to introduce fiscal federalism, since 2007 Italian regions running large deficits underwent Recovery Plans centrally managed, to restore a balanced budget keeping constant the quality of health care services provided at the regional level. Besides a standard version, a harder form of Recovery Plan encompassed a Supervisor appointed by the Central government to lead its implementation. We investigate if Recovery Plans reached their objectives of cost containment and provision of health care services and if different plans performed differently.