European Cohesion Policy to the Rescue? Revising (Counter)-Cyclical Effects in the EU-28 Recipient Countries

Lubica Stiblarova
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Lubica Stiblarova: Technical University of Košice, Faculty of Economics, Department of Finance

Journal of Economics / Ekonomicky casopis, 2022, vol. 70, issue 9-10, 681-702

Abstract: This paper empirically verifies recent efforts of EU policymakers and government authorities to apply the European Cohesion Policy (ECP) as a possible counter-cyclical instrument to boost economies in their economic downturns. Compared to limited country-specific studies, we allow for an endogeneity issue between the business cycles and the ECP payments and apply a system GMM estimation for the EU-28 recipient countries sample in the time period 2000 – 2018. Even though the overall ECP payments follow a pro-cyclical path, the model estimations for the sub-periods based on individual programming periods reveal a time-varying cyclical character of the ECP. Whereas the observed pro-cyclicality can be mainly contributed to the period 2000 – 2006, we find the conditional counter-cyclical effects in 2007 – 2013 and 2014 – 2018, when a lower price level and obeying the rule of law seem to have an extra counter-cyclical dimension, confirming a rationale of the convergence criteria and the Stability and the Growth Pact.

Keywords: allocation; European Cohesion Policy; cyclicality; system gmm estimation (search for similar items in EconPapers)
JEL-codes: E32 E63 F36 F45 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:sav:journl:v:70:y:2022:i:9-10:p:681-702

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