Assessing the Impact of EU Digital Interventions (2021-2027): A Dynamic Spatial General Equilibrium Approach

This paper examines the macroeconomic effects of digital investments in the European Union during the 2021–2027 period. Using a dynamic spatial multi-country and multi-sector general equilibrium framework calibrated for all EU Member States, we analyse how different forms of digital interventions, such as public infrastructure investment, firm-level digitalisation, and skills development, affect the macroeconomy of EU27. The analysis draws on a novel dataset that covers approximately €175 billion of planned investments financed through five major EU programmes. Results show that digital investments have a positive and lasting impact on output, employment, as well as on capital accumulation and household consumption across the Union, revealing an interesting price-competitiveness channel for net exports. The inclusion of cross-border digital spillovers further amplifies these effects, suggesting that improvements in digital connectivity and infrastructure generate benefits beyond national economies.