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A CGE Approach to Measuring the Impacts of EU Structural Funds in a Small Open Economy

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  • Mario Fortuna
  • Francisco Silva
  • Ana Medeiros

Abstract

The objective of the current paper is to analyze the impact of the European Union (EU) funds on gross domestic product (GDP) and employment in the Azores. The theoretical model is based on a modeling platform for the Azorean economy, supported by a dynamical multi-sector computable general equilibrium model (CGE) – Azormod, which incorporates the economic behavior of six agents - firms, households, regional government, central government, European Commission and external sector- and controls for six different income levels. The simulations studied the impact in the Azorean Economy of eliminating the EU funds. As expected, the study reveals that in the absence of EU funds there would be a reduction in the public consumption and in the level of well-being of consumers while investment would increase as factor prices would decrease. GDP and employment decrease relative to the reference scenario with EU transfers. According to the model, other things being equal, it would take ten years for GDP to recover its initial levels. Employment, assuming flexible wages, recovers faster. See above See above

Suggested Citation

  • Mario Fortuna & Francisco Silva & Ana Medeiros, 2011. "A CGE Approach to Measuring the Impacts of EU Structural Funds in a Small Open Economy," EcoMod2011 3464, EcoMod.
    • Handle: RePEc:ekd:002625:3464
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    Cited by:

    1. Augusto Cerqua & Guido Pellegrini, 2023. "I will survive! The impact of place-based policies when public transfers fade out," Regional Studies, Taylor & Francis Journals, vol. 57(8), pages 1605-1618, August.
    2. Davide Fiaschi & Andrea Mario Lavezzi & Angela Parenti, 2018. "Does EU cohesion policy work? Theory and evidence," Journal of Regional Science, Wiley Blackwell, vol. 58(2), pages 386-423, March.
    3. Lukasz Pietak, 2021. "Structural Funds and Convergence in Poland," Hacienda Pública Española / Review of Public Economics, IEF, vol. 236(1), pages 3-37, March.

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