The potential impact of EU cohesion policy spending in the 2007-13 programming period : a model-based analysis

EU cohesion policy supports investment in infrastructure, R&D and human capital in Europe's poorer regions. This paper provides a model-based assessment of the potential macro-economic impact of these fiscal transfers using a microfounded dynamic general equilibrium model with semi-endogenous growth and endogenous human capital accumulation. The simulations show the potential benefits of Structural Funds with significant output gains in the long run due to sizeable productivity improvements. Cofinancing conditions are found to raise the long term output effects. Delays in spending profiles lead to lower gains.