Evi Pappa

amse seminar

Evi Pappa

Universidad Carlos III Madrid
What are the likely macroeconomic effects of the EU Recovery plan?
Joint with
Fabio Canova
Monday, March 15 2021| 11:30am to 12:45pm

Ewen Gallic: ewen.gallic[at]univ-amu.fr
Avner Seror: avner.seror[at]univ-amu.fr


We examine the dynamic macroeconomic effects of the two largest EU regional structural funds. On average, ERDF funds have significant positive short term consequences on regional macroeconomic variables and gains dissipate almost entirely within three years. ESF funds have negative impact effects on regional variables, but their average cumulative medium term multipliers are positive and economically significant. We detect important regional asymmetries which may induce differential transition paths and outlooks for economic transformation. Location, level of development, EU tenure, Euro area membership and national borders account for part of the asymmetries. We present a two-region equilibrium model with sticky prices and endogenous growth through investment in R&D and human capital that reproduces the facts and explains some of the observed asymmetries. The policy implications for the newly created Recovery fund are discussed.

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