How does EU cohesion policy work? Evaluating its effects on fiscal outcome variables

The impact of EU Cohesion Policy has mainly been evaluated with regard to its growth effects. We extend the perspective by investigating the impact of EU Cohesion Policy on public investments and budget deficits in order to learn more about the channels through which this policy field works. Using a dataset of 27 EU countries for the time period 1982-2006, we find that EU Cohesion Policy payments do not cause public investments to increase significantly, which points to a crowding out of national investment. Moreover, the hypothesis that EU Cohesion Policy is used for the consolidation of public budgets cannot be completely rejected. --EU Cohesion Policy,public investment,public deficits,panel data

Which is the Right Dose of EU Cohesion Policy for Economic Growth?

The current empirical literature on the impact of EU Cohesion Policy on the economic growth rates of the European regions mainly relies on functional form assumptions. However, it is ex ante not clear which functional form is appropriate with regard to the relationship between structural funds pay- ments and regional economic growth. In order to avoid such assumptions, this paper applies the method of generalized propensity score (GPS) to a sample of 122 NUTS-1 and NUTS-2 EU-15 regions for the time period 1995{2005, which leads to the estimation of a dose-response function, as proposed by Hirano and Imbens (2004). Our results indicate that structural funds payments have a positive, but not statistically significant, impact on the regions' average three-year growth rates. This implies that it does not matter which \dose" of structural funds payments a region receives. --EU structural funds,economic growth,continuous treatment,dose-response function

Do EU structural funds promote regional employment? Evidence from dynamic panel data models

Despite its rather broad goal of promoting “economic, social and territorial cohesion”, the existing literature has mainly focused on investigating the Cohesion Policy’s growth effects. This ignores the fact that part of the EU expenditures is directly aimed at reducing disparities in the employment sector. Against this background, the paper analyses the impact of EU structural funds on employment drawing on a panel dataset of 130 European NUTS regions over the time period 1999-2007. Compared to previous studies we (i) explicitly take into account the unambiguous theoretical propositions by testing the conditional impact of structural funds on the educational attainment of the regional labour supply, (ii) use more precise measures of structural funds for an extended time horizon and (iii) examine the robustness of our results by comparing different dynamic panel econometric approaches to control for heteroscedasticity, serial and spatial correlation as well as for endogeneity. Our results indicate that high-skilled population in particular benefits from EU structural funds. JEL Classification: R11, R12, C23, J20dynamic panel models, EU structural funds, regional employment effects, spatial panel econometrics

EMU-enlargement and the Reshaping of Decision-making within the ECB Governing Council: A Voting-Power Analysis

The monetary policy of the European Central Bank (ECB) is the subject matter of this paper. We analyze the prospects for future price stability in an enlarged European Monetary and Economic Union (EMU). At the heart of this study are the potential e®ects of altering decision-making procedure within the Governing Council of the ECB on price stability in the eurozone. The authors compare the impact of three alternative reform scenarios of the ECB Governing Council with the help of a voting-power analysis. It is presumed that a considerable loss of current EMU-members’ influence power especially in favour of joining Central Eastern European Countries (CEECs) results in a loss of monetary credibility of the ECB: As transparency of the decision-making process within the ECB is lacking, markets may consider the ECB to be too much inclined to the economic performances of the CEECs. This has then a negative impact on the level of price stability in Europe. The voting-power analysis indicates which reform proposal is best with respect to a price-stability benchmark.

Does EU Cohesion Policy Promote Growth? Evidence from Regional Data and Alternative Econometric Approaches

This paper analyses the growth e®ects of EU structural funds using a new panel dataset of 124 NUTS-1 / NUTS-2 regions over the time period 1995-2005. We extend the current literature with regard to at least three aspects: First of all, we extend the time period of investigation, using structural funds payments of the last Financial Perspective 2000{2006 that have not been analysed before. Second, we use more precise measures of structural funds by distinguishing between Objective 1, 2 and 3 payments and by investigating the impact of time lags more carefully. Third, we examine the robustness of our results by comparing different econometric approaches highlighting specific methodological problems. Apart from \classical" panel data methods like system GMM, we apply spatial panel econometric techniques. The empirical evidence indicates that the Objective 1 payments in particular have a positive and significant impact on growth, whereas Objective 2 and 3 payments negatively affect the regions' growth rates. Furthermore, our results show that the growth impact occurs with a time lag of approximately two to three years. --EU structural funds,economic growth,spatial econometrics

Who's afraid of an EU tax and why? Revenue system preferences in the European Parliament

The EU's revenue system is still typical for an organisation based on international cooperation and stands in contrast to the Union's far advanced legislative and political role. This contrast feeds the debate on granting the EU an autonomous tax source. Our contribution explores the factors which shape the acceptance of the EU tax option among European policy makers. We make use of a unique database : A survey among Members of the European Parliament (MEP) which resulted in a response of some 150 of the representatives. Our results confirm an important role for party ideology and individual characteristics but they also demonstrate that country-specific factors are important to understand the support for an EU tax. In the light of our findings the status quo bias in the EU's revenue system can be attributed to the persistent importance of national interests with respect to fiscal burden sharing and tax policy. --European Parliament,EU tax,revenue system

Does EU cohesion policy promote growth? : evidence from regional data and alternative econometric approaches

This paper analyses the growth effects of EU structural funds using a new panel dataset of 124 NUTS-1 / NUTS-2 regions over the time period 1995-2005. We extend the current literature with regard to at least three aspects: First of all, we extend the time period of investigation, using structural funds payments of the last Financial Perspective 2000-2006 that have not been analysed before. Second, we use more precise measures of structural funds by distinguishing between Objective 1, 2 and 3 payments and by investigating the impact of time lags more carefully. Third, we examine the robustness of our results by comparing different econometric approaches highlighting specific methodological problems. Apart from "classical" panel data methods like system GMM, we apply spatial panel econometric techniques. The empirical evidence indicates that the Objective 1 payments in particular have a positive and significant impact on growth, whereas Objective 2 and 3 payments negatively affect the regions' growth rates. Furthermore, our results show that the growth impact occurs with a time lag of approximately two to three years

Which is the Right Dose of EU Cohesion Policy for Economic Growth?

The current empirical literature on the impact of EU Cohesion Policy on the economic growth rates of the European regions mainly relies on functional form assumptions. However, it is ex ante not clear which functional form is appropriate with regard to the relationship between structural funds payments and regional economic growth. In order to avoid such assumptions, this paper applies the method of generalized propensity score (GPS) to a sample of 122 NUTS-1 and NUTS-2 EU-15 regions for the time period 1995-2005, which leads to the estimation of a dose-response function, as proposed by Hirano and Imbens (2004). Our results indicate that structural funds payments have a positive, but not statistically signficant, impact on the regions' average three-year growth rates. This implies that it does not matter which "dose" of structural funds payments a region receives

Econometric evaluation of EU Cohesion Policy : a survey

More than one third of the European Union's total budget is spent on socalled Cohesion Policy via the structural funds. Its main purpose is to promote the development of the EU and to support convergence between the levels of development of the various European regions. Investigating the impact of European Cohesion Policy on economic growth and convergence is a wide research topic in applied econometric research. Nevertheless, the empirical evidence has provided mixed, if not contradictory, results. Against this background, the aim of this chapter is to provide a fundamental review on this topic. Taking fundamental methodological issues into account, we review the existing econometric evaluation studies, draw several conclusions and provide some remarks for future research

How does EU cohesion policy work? : Evaluating its effects on fiscal outcome variables

The impact of EU Cohesion Policy has mainly been evaluated with regard to its growth effects. We extend the perspective by investigating the impact of EU Cohesion Policy on public investments and budget deficits in order to learn more about the channels through which this policy field works. Using a dataset of 27 EU countries for the time period 1982-2006, we find that EU Cohesion Policy payments do not cause public investments to increase significantly, which points to a crowding out of national investment. Moreover, the hypothesis that EU Cohesion Policy is used for the consolidation of public budgets cannot be completely rejected