What are the likely macroeconomic effects of the EU Recovery plan?

Evi Pappa and Fabio Canova

No 16669, CEPR Discussion Papers from Centre for Economic Policy Research

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; R&d and human capital investment; Externalities (search for similar items in EconPapers)
JEL-codes: C32 E27 E32 H30 (search for similar items in EconPapers)
Date: 2021-10
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