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on Economic Geography |
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Issue of 2025–11–17
three papers chosen by Andreas Koch, Institut für Angewandte Wirtschaftsforschung |
| By: | Dettmann, Eva; Fritz, Sarah |
| Abstract: | This study provides new evidence on the impact of the EU Cohesion Policy on income growth in less developed regions. Our panel includes data from all European regions for the years 1989-2020. Using a fuzzy Regression Discontinuity Design, we model treatment dynamics by applying a random effects estimator. Based on digitized historical data, we precisely replicate the policy rule and correctly classify the regions' eligibility status. Results show that the policy has a moderate positive effect on GDP per capita growth in the targeted regions. |
| Keywords: | causal analysis, EU Cohesion Policy, regression discontinuity design, place-based policy |
| JEL: | H20 R11 R58 Z18 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwhdps:330917 |
| By: | Giuseppe Cavaliere; Luca Fanelli; Marco Mazzali |
| Abstract: | This study evaluates the effectiveness of Italian local fiscal policy by estimating regional government spending multipliers at the NUTS-2 and NUTS-1 levels, using annual data from 1995 to 2021. We employ a novel econometric methodology to comprehensively capture the heterogeneous effects of exogenous government spending across regions, disentangling the effects of public investment from those of public consumption. Our analysis is based on Factor-Augmented Vector Autoregressive (FA-VAR) models, where an external instrument is used to indirectly identify fiscal spending shocks. To address the challenge of identifying valid external instruments in a context of limited cross-sectional data, we use factor analysis to construct a non-fiscal instrument capturing the "common" (national) component driving the dynamics of Italian regional output. This instrument is applied across all regions to estimate fiscal reaction functions. We find that while expansionary fiscal shocks induce positive short-term effects - particularly when public regional investment is analyzed separately from public regional consumption - the uncertainty surrounding these effects is remarkably high. This crucial aspect, often overlooked in the existing literature, complicates the empirical assessment of the effectiveness of regional fiscal policy. Based on our bootstrap based robust confidence intervals, the effects of fiscal spending shocks tend to dissipate in a few years. We also detected significant regional disparities, with fiscal multipliers being larger in the Center-North regions compared to the Southern regions. This pattern persists even when analyzing Italian macro-areas (NUTS-1 level), underscoring the need for tailored regional fiscal policies. |
| JEL: | C32 C50 E62 R58 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:bol:bodewp:wp1216 |
| By: | 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. |
| Keywords: | Fiscal policy; Mission-Oriented Innovation Policies; R&D government spending; Sectoral heterogeneity; Regional economics; Local Projections; European regions. Jel Classification: R11; E62; H50; O38 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:usi:wpaper:934 |