Efficiency and elusion: both sides of public enterprises in Spain

The main objective of this research consists on analyzing regional public sector enterprises (PSEs) in Spain. We describe a general view on Spanish Autonomous Communities (ACs) financial resources, in the context of the Stability and Growth Pact and Budgetary Stability Act. From 2002, such regulation imposes several constraints to ACs� indebtness. In this paper, we find out about the roll of PSEs as an alternative way to traditional debt mechanisms. Thus, according to Eurostat criteria, PSEs� debt can be taken off the public sector�s consolidated budget. Descriptive and econometric results confirm our expectations. ACs� have used public enterprises to avoid the stringent financial rules. Additionally, it seems that low productivity ACs are accumulating more public debt outside the scope of consolidation. The paper concludes with some recommendations and policy implications