R&D Government Spending and Regional Structural Dynamics: Sectoral Heterogeneity in Europe

Giovanna Ciaffi (), Matteo Deleidi () and Antonino LOfaro ()

Department of Economics University of Siena from Department of Economics, University of Siena

Abstract: This paper evaluates the impact of Mission–Oriented Innovation Policies (MOIPs) and public R&D investment by quantifying the responses of GDP, private investment, hours worked, labour productivity, and the real hourly wage. We combine a Bartik–type identification strategy with the Local Projections method on a novel dataset with a sectoral–regional dimension, covering 333 European NUTS–2 regions over 1995–2019. Results show that R&D government spending exerts robust and persistent expansionary effects, crowding in private investment, raising employment, and boosting productivity. Sectoral heterogeneity emerges, with high multiplicative effects in construction and finance, while employment effects are concentrated in construction and market services.

Keywords: Fiscal policy; Mission-Oriented Innovation Policies; R&D government spending; Sectoral heterogeneity; Regional economics; Local Projections; European regions. Jel Classification: R11; E62; H50; O38 (search for similar items in EconPapers)
Date: 2025-11
New Economics Papers: this item is included in nep-eec, nep-eur, nep-geo, nep-inv, nep-sbm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:usi:wpaper:934

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