Investment subsidies and regional welfare: a dynamic framework and its application to the European regional policy

  • Artem Korzhenevych*
  • , Johannes Bröcker
  • *Kontaktforfatter

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

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Abstract

This paper focuses on the question of the effectiveness of subsidies to private and public investment, which are a key component of European regional policy. Given mixed findings from empirical studies, it is worth studying this issue in a simulation model, where the results can be traced back to policy shocks and model assumptions. To this end, the paper employs a multiregional dynamic framework with a perfectly integrated capital market. It is found that investment subsidies are effective and capital market spillover effects are small. The argument is illustrated by numerical simulations of actual investment subsidies to the European Union regions.

OriginalsprogEngelsk
TidsskriftRegional Studies
Vol/bind54
Udgave nummer9
Sider (fra-til)1262-1274
Antal sider13
ISSN0034-3404
DOI
StatusUdgivet - 2020

Finansiering

An earlier version of this paper was published as TU Dresden CEPIE Working Paper No. 02/18 (http://nbn-resolving.de/urn:nbn:de:bsz:14-qucosa-235416). The authors are grateful to d?Artis Kancs for sharing with them the DG Regio data on regional subsidies; and to Claudia Baranzelli and Olga Ivanova for comments made on an earlier draft of this paper. Henning Meier provided excellent research support. The authors acknowledge the valuable input of the three anonymous referees that helped to improve this paper.

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