Working Paper: CEPR ID: DP16669
Authors: Evi Pappa; Fabio Canova
Abstract: We examine the macroeconomic effects of two EU regional structural funds. ERDF has positive short term average consequences on all regional variables, but gains typically dissipate within three years. ESF has insignificant average impact effects, but medium-term multipliers are positive and economically important. There are differential regional transition paths and outlooks for economic transformation. Location, level of development, EU tenure, Euro area membership, and national borders account for the asymmetries. We interpret the facts with an equilibrium model of a monetary union featuring endogenous growth. Structural features and public administration characteristics can explain the observed asymmetries. The policy implications for the Recovery and Resilience facility are discussed.
Keywords: Recovery and Resilience Fund; Countercyclical Policies; Regional Inequalities; RD and Human Capital Investment; Externalities
JEL Codes: C32; E27; E32; H30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Regional Factors (EU tenure, location, income levels) (R11) | Magnitude and Direction of Effects (C29) |
| ERDF (R10) | GVA (F29) |
| ERDF (R10) | Employment (J68) |
| ERDF (R10) | Investments (G11) |
| ESF (I20) | GVA (F29) |
| ESF (I20) | Employment (J68) |
| ESF (I20) | Investments (G11) |