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The Potential Impact of EU Cohesion Policy Spending in the 2007-13 Programming Period: A Model-Based

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  • Jan in 't Veld
  • Janos Varga

Abstract

Summary for non-specialistsThis paper provides an assessment of the potential macro-economic impact of Cohesion Policy using a microfounded dynamic general equilibrium model with semi-endogenous growth and endogenous human capital accumulation and considers the impact of co-financing condition and faster absorption of funds.EU Cohesion policy supports investment in infrastructure, R and D and human capital in Europe's poorer regions. This paper provides a model-based assessment of the potential macro-economic impact of these fiscal transfers using a microfounded dynamic general equilibrium model with semi-endogenous growth and endogenous human capital accumulation. The simulations show the potential benefits of Structural Funds with significant output gains in the long run due to sizeable productivity improvements. Co-financing conditions are found to raise the long term output effects. Delays in spending profiles lead to lower gains.

Suggested Citation

  • Jan in 't Veld & Janos Varga, 2010. "The Potential Impact of EU Cohesion Policy Spending in the 2007-13 Programming Period: A Model-Based," European Economy - Economic Papers 2008 - 2015 422, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    • Handle: RePEc:euf:ecopap:0422
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    2. Andries Brandsma & D'Artis Kancs, 2015. "RHOMOLO: A Dynamic General Equilibrium Modelling Approach to the Evaluation of the European Union's R&D Policies," Regional Studies, Taylor & Francis Journals, vol. 49(8), pages 1340-1359, August.
    3. Kengyel, Ákos, 2012. "Az Európai Unió kohéziós politikájának integrációs jelentősége és szabályozásának jövője [The integrative importance of European Union cohesion policy and its regulation future]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(3), pages 311-332.
    4. Stylianos Sakkas, 2018. "The macroeconomic implications of the European Social Fund: An impact assessment exercise using the RHOMOLO model," JRC Working Papers on Territorial Modelling and Analysis 2018-01, Joint Research Centre.
    5. Patrizio Lecca & Martin Christensen & Andrea Conte & Giovanni Mandras & Simone Salotti, 2020. "Upward pressure on wages and the interregional trade spillover effects under demand‐side shocks," Papers in Regional Science, Wiley Blackwell, vol. 99(1), pages 165-182, February.
    6. Zaman, Gheorghe & Georgescu, George, 2014. "Absorbţia fondurilor structurale şi de coeziune în Romania: bilanţul perioadei 2007-2013 şi lecţii pentru exerciţiul financiar curent [The absorption of structural and cohesion funds in Romania: ba," MPRA Paper 56144, University Library of Munich, Germany.
    7. Kengyel, Ákos, 2014. "Az európai uniós tagság mint modernizációs hajtóerő. Gondolatok a kelet-közép-európai országok EU-tagságának 10. évfordulóján [EU membership as a driving force of modernization. Ideas on the 10th a," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(4), pages 493-508.
    8. Olga Ivanova & d'Artis Kancs & Dirk Stelder, 2009. "Modelling Inter-Regional Trade Flows: Data and Methodological Issues in Rhomolo," EERI Research Paper Series EERI RP 2009/31, Economics and Econometrics Research Institute (EERI), Brussels.
    9. Carlos San Juan Mesonada & Carlos Sunyer Manteiga, 2020. "European Structural and Investment Funds and Regional Convergence: The Impact of Public Deficit in Beta-Convergence," EconPol Working Paper 47, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    10. Zeilbeck, Severin, 2015. "An investment initiative for fiscally constrained EU member states: The role of synergetic financial instruments," IPE Working Papers 58/2015, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    11. Attila Varga, 2014. "Challenges in modeling the impacts of modern development policies: The case of the GMR-approach," EcoMod2014 7151, EcoMod.
    12. GHEORGHE ZAMAN & Anca CRISTEA, 2011. "EU Structural Funds Absorption in Romania: Obstacles and Issues," Romanian Journal of Economics, Institute of National Economy, vol. 32(1(41)), pages 60-77, June.
    13. Bernadette Biatour & Chantal Kegels & Jan van der Linden & Dirk Verwerft, 2017. "Working Paper 01-17 - Public Investment in Belgium - Current State and Economic Impact," Working Papers 1701, Federal Planning Bureau, Belgium.
    14. Iskra Beleva (Искра Белева) & Victor Yotzov (Виктор Йоцов) & Iglika Vassileva (Иглика Василева) & Emil Kalchev (Емил Калчев) & Lubomir Dimitrov (Любомир Димитров) & Alexander Tassev (Александър Тасев), 2015. "Годишен Доклад 2015 "Икономическо Развитие И Политика В България: Оценки И Очаквания. Тема На Фокус: Политики За Икономическо Развитие В Оперативните Програми И Общата Селскостопанска Политика В ," ERI-BAS Books, Bulgarian Academy of Sciences - Economic Research Institute, number 28:p:1-209 edited by Iskra Beleva (Искра Белева) & Mitko Dimitrov (Митко Димитров), December.
    15. Zsolt Darvas, 2011. "Exchange Rate Policy and Economic Growth after the Financial Crisis in Central and Eastern Europe," Working Papers 1103, Department of Mathematical Economics and Economic Analysis, Corvinus University of Budapest.
    16. Filip Hruza & Stanislav Volcík & Jan Žácek, 2019. "The Impact of EU Funds on Regional Economic Growth of the Czech Republic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 69(1), pages 76-94, February.
    17. Fogarasi, József & Kristkova, Zuzana & Ratinger, Tomáš & Rokicki, Bartłomiej & Tóth, Kristóf & Wieliczko, Barbara, 2013. "Assessment of the impact of the EU "agricultural budget" for the period 2014-2020 on the financial situation of the national agriculture and the entire economy," Multiannual Program Reports 179499, Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI).
    18. Remeikiene Rita & Gaspareniene Ligita, 2016. "Evaluation of the Impact of the EU Structural Support on the Competitiveness of Lithuanian Economics," Central European Journal of Public Policy, Sciendo, vol. 10(1), pages 1-11, May.

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    More about this item

    Keywords

    Janos Varga; Jan in 't Veld; The Potential Impact of EU Cohesion Policy Spend Cohesion Policy endogenous growth R and D dynamic general equilibrium modelling;
    All these keywords.

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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