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The Recovery, Transformation and Resilience Plan and its macroeconomic impact from a sectoral standpoint

Author

Listed:
  • Alejandro Fernández Cerezo

    (Banco de España)

  • Enrique Moral-Benito

    (Banco de España)

  • Javier Quintana

    (Banco de España)

Abstract

Rationale The Recovery, Transformation and Resilience Plan (RTRP), linked to Next Generation EU, details an investment programme that represents a unique opportunity to facilitate the structural transformation of the Spanish economy, on account of both the plan’s envelope (around €69.5 billion or 5.6% of GDP in 2019) and its emphasis on the challenges posed by digitalisation and the green transition. A sectoral classification of how those investments are allocated is therefore interesting in order to quantify their macroeconomic impact, taking into account the interplay between the different sectors of activity. Takeaways •According to the findings, fully absorbing the RTRP funds would have a direct impact on GDP of 1.15% in annual average terms over a five-year horizon, although this figure could rise to 1.75% when considering spillover effects between sectors. •The estimated effects are heterogeneous across sectors; the sectors benefiting the most are those linked to the digitalisation process (information and communication, and professional and technical services) and the construction sector, owing to investment in public infrastructures related to the green transition. •However, rigidities in the reallocation of resources between sectors of activity could limit the macroeconomic effect of the investments envisaged in the RTRP. These factors could reduce the estimated impact from 1.75% to 1.3% of GDP.

Suggested Citation

  • Alejandro Fernández Cerezo & Enrique Moral-Benito & Javier Quintana, 2023. "The Recovery, Transformation and Resilience Plan and its macroeconomic impact from a sectoral standpoint," Economic Bulletin, Banco de España, issue 2023/Q1.
  • Handle: RePEc:bde:journl:y:2023:i:01:n:12
    DOI: https://doi.org/10.53479/29539
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    References listed on IDEAS

    as
    1. Raj Chetty & Adam Guren & Day Manoli & Andrea Weber, 2011. "Are Micro and Macro Labor Supply Elasticities Consistent? A Review of Evidence on the Intensive and Extensive Margins," American Economic Review, American Economic Association, vol. 101(3), pages 471-475, May.
    2. Mary O'Mahony & Marcel P. Timmer, 2009. "Output, Input and Productivity Measures at the Industry Level: The EU KLEMS Database," Economic Journal, Royal Economic Society, vol. 119(538), pages 374-403, June.
    3. Alejandro Fernández-Cerezo & Enrique Moral-Benito & Javier Quintana, 2023. "A production network model for the Spanish economy with an application to the impact of NGEU funds," Working Papers 2305, Banco de España.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Bonam, Dennis & Ciccarelli, Matteo & Gomes, Sandra & Aldama, Pierre & Bańkowski, Krzysztof & Buss, Ginters & da Costa, José Cardoso & Christoffel, Kai & Elfsbacka Schmöller, Michaela & Jacquinot, Pasc, 2024. "Challenges for monetary and fiscal policy interactions in the post-pandemic era," Occasional Paper Series 337, European Central Bank.

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    More about this item

    Keywords

    Input-output models; industrial policy; public investment; Next Generation EU;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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