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Cohesion Policy Spending in the New Member States of the EU in an Endogenous Growth Model

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  • Janos Varga
  • Jan in't Veld

Abstract

European Union Cohesion Policy supports investment in infrastructure, research and development, and human capital in Europe's poorer regions. This paper provides a model-based assessment of the potential macroeconomic impact of these fiscal transfers using a microfounded dynamic general equilibrium model with 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 sizable productivity improvements. The condition that recipient countries cofinance part of the funding is found to raise the long-term output effects. Delays in spending due to slow absorption of available funding reduce potential gains.

Suggested Citation

  • Janos Varga & Jan in't Veld, 2011. "Cohesion Policy Spending in the New Member States of the EU in an Endogenous Growth Model," Eastern European Economics, Taylor & Francis Journals, vol. 49(5), pages 29-54, September.
    • Handle: RePEc:mes:eaeuec:v:49:y:2011:i:5:p:29-54
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    Cited by:

    1. 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).
    2. Ovidiu Puiu & Cristina Serbanica & Alina Voiculet & Sebastian Ene & Cristina Ganescu, 2017. "Eu Cohesion Policy In Central And Eastern Europe: A Comparative Analysis," Management Strategies Journal, Constantin Brancoveanu University, vol. 35(1), pages 342-354.

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