European Cohesion Policy to the Rescue? Revising (Counter)-Cyclical Effects in the EU-28 Recipient Countries

Year, pages: 2022, 681 - 702

This paper empirically verifies recent efforts of EU policymakers and government authorities to apply the European Cohesion Policy (ECP) as a possible counter-cyclical instrument to boost economies in their economic downturns. Compared to limited country-specific studies, we allow for an endogeneity issue between the business cycles and the ECP payments and apply a system GMM estimation for the EU-28 recipient countries sample in the time period 2000 – 2018. Even though the overall ECP payments follow a pro-cyclical path, the model estimations for the sub-periods based on individual programming periods reveal a time-varying cyclical character of the ECP. Whereas the observed pro-cyclicality can be mainly contributed to the period 2000 – 2006, we find the conditional counter-cyclical effects in 2007 – 2013 and 2014 – 2018, when a lower price level and obeying the rule of law seem to have an extra counter-cyclical dimension, confirming a rationale of the convergence criteria and the Stability and the Growth Pact.

Stiblarova, L. 2022. European Cohesion Policy to the Rescue? Revising (Counter)-Cyclical Effects in the EU-28 Recipient Countries. In Ekonomický časopis/Journal of Economics, vol. 70, no.9-10, pp. 681-702. 0013-3035. DOI: https://doi.org/10.31577/ekoncas.2022.09-10.01

Stiblarova, L. (2022). European Cohesion Policy to the Rescue? Revising (Counter)-Cyclical Effects in the EU-28 Recipient Countries. Ekonomický časopis/Journal of Economics, 70(9-10), 681-702. 0013-3035. DOI: https://doi.org/10.31577/ekoncas.2022.09-10.01

Publisher: Ekonomický ústav SAV