Recursive Stored Procs?

Does postgres support recursive stored procs? I thought I remember
reading in the docs a while back that it didn't, but now I can't find
any mention one way or another.

If they are supported, how do transactions work? For example, say A
calls B followed by C, and C has an error. I assume C is automatically
aborted. While A can detect if C failed and also abort, what about the
changes B made? If the call to A starts the transaction and the exit of
A commits or aborts, then that's cool, but if each call gets its own
transaction, that would make things difficult.