NUTS2 Data Analysis of the Impact of EU Cohesion Funds on Gross Value Added in Italy by Industry

Abstract

In this study we assess the impact of the ERDF funded fiscal spending on aggregate and industry sector real GVA growth using regional (NUTS2) data for Italy. We contribute to the literature, first, by relying on a non-recursive identifying scheme to retrieve a fiscal spending shock based on a mixed frequency dataset involving quarterly employment and yearly GVA and EU structural funds. Moreover, we examine, through panel local projection regression, the effects of the identified government spending shock on 29 sectors, accounting for an asymmetric response depending on upstream industry sector linkages proxying a sector specific demand shock