Short and longer-term effects of European regional policy

F. Crucitti, P. Lecca, P. Monfort, S. Salotti

Economic Analysis and Policy Vol. 86, pp. 1748 - 1765

Summary:

We quantify the system-wide impact of the European Structural Funds 2014–20 using a large-scale spatial general equilibrium model, calibrated for 89 regions in the EU and the UK. We find that policies that stimulate private and public investment have larger and longer-lasting effects than demand-side policies. In the latter case, the model shows a rapid adjustment to the post-policy equilibrium, which limits the legacy effects of the interventions. In addition, we show the importance of agents’ expectations in assessing the impact of the interventions supported by the funds. A model with perfect foresight tends to predict smaller impacts than a model with myopic agents would imply. The regional distribution of the differences in GDP impact between the two variants of the model suggests that the largest deviations are recorded for net beneficiary regions, with interesting implications for perceived policy persistence, the nature of interventions, and their long-term effects.

Spanish layman's summary:

Utilizando un modelo de equilibrio general espacial, el artículo cuantifica el impacto de los Fondos Estructurales Europeos y evalúa la capacidad redistributiva de las políticas place-based, así como su capacidad para generar efectos de spatial spillover relacionados con el comercio y la movilidad del capital.

English layman's summary:

Using a large-scale spatial general equilibrium model the paper quantifies the system-wide impact of the European Structural Funds and evaluates the magnitude of the redistributive capacity of place-based policies and their ability to generate spatial spillovers related to trade and capital mobility.

Keywords: Computable general equilibrium modelling; Regional economics; Cohesion policy

JCR-JIF Impact Factor and WoS quartile: 9,000 - Q1 (2025)

DOI reference: https://doi.org/10.1016/j.eap.2025.04.036

Published on paper: June 2025.

Published on-line: May 2025.

Citation:
F. Crucitti, P. Lecca, P. Monfort, S. Salotti, "Short and longer-term effects of European regional policy", Economic Analysis and Policy, Vol. 86, pp. 1748 - 1765, June 2025. [Online: May 2025] doi: 10.1016/j.eap.2025.04.036