This paper develops a simple model that can be used to estimate the effectiveness of Cohesion expenditure relative to similar but unsubsidized projects, thereby making it possible to explicitly test an important assumption that is often implicit in estimates of the impact of Cohesion policies....

We study the effects of government spending by using a structural, large dimensional, dynamic factor model. We find that the government spending shock is non-fundamental for the variables commonly used in the structural VAR literature, so that its impulse response functions cannot be...

We derive necessary and sufficient conditions under which a set of variables is informationally sufficient, i.e. it contains enough information to estimate the structural shocks with a VAR model. Based on such conditions, we suggest a procedure to test for informational sufficiency. Moreover, we...