Incentives for dwelling renovations: evidence from a large fiscal programme

Antonio Accetturo, Elisabetta Olivieri and Fabrizio Renzi ()
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Fabrizio Renzi: Bank of Italy

No 860, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: We analyse the economic impact of two tax credits ('Bonus Facciate'/facades bonus and 'Superbonus 110%'), active from the second half of 2020, which resulted in an expenditure of more than €170 billion in 2021-23 (about 3 per cent of GDP per year). The programmes aimed at improving the aesthetics, energy efficiency, and earthquake resistance of residential dwellings. Using the synthetic control method, we find that more than €45 billion represents a 'deadweight loss', as one fourth of the spending related to subsidized investments would have been carried out even absent the incentives. Given this result, we find that the fiscal multiplier is slightly below one, a figure lower than the ones associated with public investments in standard macroeconomic models or estimated for green investments. Using Input-Output tables, we compute that the incentives accounted for roughly three quarters of growth in value added in the construction sector between 2020 and 2023, but they played a rather limited role in other sectors.

Keywords: programme evaluation; synthetic control method; dwelling investments; input-output tables (search for similar items in EconPapers)
JEL-codes: H2 H3 R3 (search for similar items in EconPapers)
Date: 2024-06
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Citations: View citations in EconPapers (1)

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