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EU Budget: The crowd-in effects

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The Recovery and Resilience Facility (RRF) and the structural funds together account for a substantial share of resources directed at mobilising investment by the European Union, supporting the green and digital transitions, and promoting economic convergence across member states. This paper estimates their short to medium-run effects on capital formation and whether they crowd in private investment. We focus on the RRF and on the European Structural and Investment Funds (ESIF), for which consistent disbursement data are available. Because the two differ in structure, the RRF being a new instrument tied to reform milestones and ESIF a recurring flow of disbursements, they call for distinct identification strategies: synthetic control methods for the RRF and local projections for ESIF. Both raise aggregate investment in the short to medium run, with the response strongly tilted toward private capital formation. ESIF crowds in private investment beyond what direct transfers to firms can account for, and the RRF synthetic control shows a positive and increasing effect on total investment from 2022 onward, driven predominantly by the private side.

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  • Di Pietro Filippo & Haustein Erik & Conte Andrea & D'adamo Gaetano & Winterhager Vincent, 2026. "EU Budget: The crowd-in effects," JRC Working Papers on Territorial Modelling and Analysis 2026-06, Joint Research Centre.
    • Handle: RePEc:ipt:termod:202606
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    File URL: https://publications.jrc.ec.europa.eu/repository/handle/JRC147281
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