Do economic models tell us anything useful about Cohesion Policy impacts? A comparison of HERMIN, QUEST and ECOMOD

An ex-ante impact analysis of EC Cohesion Policy investment programmes for the period 2007-2013 was recently carried out on behalf of the European Commission (DG Regional Policy) using three different economic models: the QUEST II model of DG-ECFIN, the ECOMOD model of EcoMod Network/Free University of Brussels and the COHESION system of HERMIN models of GEFRA/EMDS. The main results were published in the most recent Fourth Cohesion Report (EC, 2007), and it turned out that different models gave different results. In some cases the differences were very big and pointed to quite different conclusions about the impact of the European Cohesion Policy on growth and employment impacts. In order to progress the debate on the usefulness of model-based policy impact analysis, we first set out the wider context within which EC Cohesion Policy is designed, implemented and evaluated. We then present a brief summary of the main findings of the model-based analysis in terms of impacts on aggregate GDP and total employment. We conclude with a discussion of possible reasons why two of the models – QUEST and HERMIN - may be producing different results.