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On the Optimal Design of Place-Based Policies: A Structural Evaluation of EU Regional Transfers

Yashar Blouri and Maximilian von Ehrlich ()

No 6742, CESifo Working Paper Series from CESifo Group Munich

Abstract: We quantify general equilibrium effects of place-based policies in a multi-region framework with mobility, trade and agglomeration economies. Using detailed data on EU transfers, we infer the local effects of different transfer types on productivity, income and transportation cost. Based on these estimates and the general equilibrium model we derive the spatial distribution of economic activity and the resulting aggregate welfare effects if (i) no transfers were paid and taxes set to zero, (ii) transfers were distributed uniformly, (iii) transfers were welfare-optimally distributed. Characterizing the optimal distributions, we reveal complementarities between transfer types and between transfers and local endowments.

Keywords: economic geography; place-based policies; structural estimation subsidies; public investments; European structural funds (search for similar items in EconPapers)
JEL-codes: R10 R50 F10 F20 H20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo and nep-ure
Date: 2017
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Working Paper: On the optimal design of place-based policies: A structural evaluation of EU regional transfers (2017) Downloads
Working Paper: On the optimal design of place-based policies: A structural evaluation of EU regional transfers (2017) Downloads
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