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R&D Government Spending and Regional Structural Dynamics: Sectoral Heterogeneity in Europe

Author

Listed:
  • Giovanna Ciaffi

  • Matteo Deleidi

  • Antonino LOfaro

Abstract

This paper evaluates the impact of Mission–Oriented Innovation Policies (MOIPs) and public R&D investment by quantifying the responses of GDP, private investment, hours worked, labour productivity, and the real hourly wage. We combine a Bartik–type identification strategy with the Local Projections method on a novel dataset with a sectoral–regional dimension, covering 333 European NUTS–2 regions over 1995–2019. Results show that R&D government spending exerts robust and persistent expansionary effects, crowding in private investment, raising employment, and boosting productivity. Sectoral heterogeneity emerges, with high multiplicative effects in construction and finance, while employment effects are concentrated in construction and market services.

Suggested Citation

  • Giovanna Ciaffi & Matteo Deleidi & Antonino LOfaro, 2025. "R&D Government Spending and Regional Structural Dynamics: Sectoral Heterogeneity in Europe," Department of Economics University of Siena 934, Department of Economics, University of Siena.
    • Handle: RePEc:usi:wpaper:934
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    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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