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Abstract: The main purpose of our paper is to analyse the issues related to the activities of the Romanian audit body responsible for overseeing EU budget expenditures (the Audit Authority/AA) and to highlight its impact on the efficient use of European funds through a chronological and thematic approach. The authors believe that this article provides a solid foundation for further discussions on optimizing the activities of this body and aligning them with European requirements. Our approach focuses on the legislative steps involved in the creation of the AA, emphasizing that the first step toward institutionalizing the audit of EU budget expenditures was the extension of the Romanian Court of Accounts' (RCA) responsibilities to include European funds. Subsequently, the AA was established as a distinct body with operational independence within the RCA. This institutional model was chosen to meet the EU's specific requirements for audit transparency and autonomy. The current legislation outlines the responsibilities of the AA, including its reporting obligations to the European Commission (EC). Our references also cover the recent results of the institution's activities, as well as the deficiencies identified, which include procedural irregularities, the absence of effective monitoring mechanisms, and delays in project implementation. These issues have been categorized by program, highlighting the areas requiring urgent intervention. The paper's final conclusion is that the analysed body plays a important role in ensuring transparency and accountability in the use of European funds in Romania. Nevertheless, improvements are still necessary to address the identified deficiencies and strengthen the institution's administrative capacity.
Abstract: This article analyzes changes in fiscal policy in agriculture in Poland from 2004 to 2024, as captured through the prism of budget expenditures on agriculture. The analysis focused on the volume, dynamics, and structure of total agricultural budget expenditures, including national budget funds and EU funds allocated to the European budget. It was found that during the two decades of Poland’s membership in the European Union, agricultural budget expenditures were strongly influenced by the volume of European funds allocated to agriculture and rural development under the instruments of the Common Agricultural Policy. Changes in agricultural budget expenditures, were mainly due to the adjustment of the national fiscal policy towards agriculture to the structural changes taking place in the agricultural sector. They also resulted from specific state fiscal interventions aimed at mitigating the adverse effects of destabilizing agricultural markets and crises caused by natural-climatic and geopolitical factors. Poland’s agricultural budget expenditures were subject to both evolutionary changes resulting from modifications to agricultural policy, as well as changes in the government’s response to the current challenges and problems of the agricultural sector and the agricultural market.
Abstract: To confront global challenges and to assert itself more firmly on the international stage, the EU has not only expanded its overall budget for external action. It has also increasingly deployed de-risking instruments, like blending and guarantees, aimed at leveraging financial resources from other actors. This raises important questions regarding the governance of European external finance. To unpack these issues, this paper reviews the rise and consolidation of blending and guarantees in the institutional and budgetary architecture of EU development policy. It traces how these instruments – originally conceived as vehicles for leveraging private sector finance – have instead led to the rise of European development banks, most notably the European Investment Bank. We argue that development banks offer a middle-ground, as the European Commission seeks to manage the tensions and trade-offs between leveraging financial resources, on the one hand, and retaining a strong steering role in its external action, on the other.
Abstract: Against a backdrop of debt ratio targets being central to recent proposed changes to the EU fiscal rules, we examine errors in official forecasts of the General Government debt ratios and their determinants in 26 member states from 2012 to 2019 when the “six pack” rules applied. We find debt ratio outturns exceeding projected values with forecast errors increasing over a four-year horizon. Larger errors arise where the initial debt ratio exceeds the Maastricht Treaty threshold of 60 per cent. In modelling the forecast errors of the debt ratio, we find that most of the variation is explained by forecast errors in the output growth rate and in the structural budget balance, as well as previous errors in projecting the debt ratio. During the sample period, member states who had not met their medium-term objective of a balanced structural budget were expected to adhere to a net expenditure rule. For countries subject to this requirement, we find undue optimism arising in forecasting the deficit ratio, a determinant of the debt ratio. The implications of these findings for EU policymakers and, in particular, forecasters are considered.
Abstract: This paper investigates the impact of the EU's Structural, Cohesion, and Pre-accession Funds on economic growth. We look at a large sample of 27 EU countries and the UK between 1989 and 2020, essentially covering the full history of these funds. We show that the growth effect of the funds is conditional on institutional quality: the funds contribute to economic growth only in countries with strong institutions: low corruption, strong rule of law, effective governments, and strong regulatory quality. Our research has important messages for the expected economic impact of the Next Generation EU (NGEU) and the Recovery and Resilience Facility (RRF), and the design of future EU funds. Our findings highlight the risk that countries with weaker institutions, which tend to receive more funds, may use such funds less efficiently. It is, therefore, important that funding is linked to requirements to improve the quality of institutions. In this respect, countries that receive more RRF funds are indeed expected to introduce more structural reforms, some of which have the potential to improve institutional quality and thereby improve the effectiveness of the RRF and EU funds in general – this is a promising approach that could be used in case of the EU funds too
Abstract : We quantify the sectoral and aggregate effects of the Next Generation European Union program in the Spanish economy. We outline a dynamic model with production and investment networks that allows for different linkages among sectors and countries. Our model can accommodate different stimulus packages, such as public infrastructure investment, current public expenditure, or capital transfers to firms. Considering the amplification effects through the production network, the average impact on gross domestic product over a five-year horizon is estimated to be 1.75% per year, about 0.6% larger than the direct impact estimated without network interactions. Our model also identifies potential threats, such as the emergence of bottlenecks, inflationary pressures from public spending, or shortages of high-skilled workers in certain sectors, that could significantly reduce the program’s positive impact. •We quantify the impact of the Next Generation EU program on the Spanish economy. We build a dynamic multi-sector model to predict the impact of stimulus packages. Network spillovers increase the impact on GDP over a five-year horizon to 1.75%.•The model identifies potential threats such as bottlenecks or labor shortages.
Abstract: The use of Cohesion Policy and Common Agricultural Policy funds vary significantly between regions within the European Union. Each policy fund typically benefits different recipients within the same region. While conventional wisdom suggests that there are implications stemming from the overlap in these policy streams within the same region, this study explores the source and the extent to which a synergy or trade-off arises. Using multivariate statistical analysis, this paper models the associations in the allocation of specific EU Cohesion Policy and Common Agricultural Policy funds among spending sub-categories. Results show that this more granular measurement, whilst considering multiple preferences in aggregating structural place-based characteristics by employing the sigma-mu methodology, provides evidence of policy synergy and trade-offs arising within territories. Thus, we identify the specific sources of funding categories that work successfully in tandem and those that seemingly have a detrimental effect when applied simultaneously in the same region. This poses challenging questions about the choice of policy mix for generating positive synergies and whether such a framework can be extended to other policy realms and their interactions
Abstract: Tourism is a key economic sector, yet its prominence within European Union funding remains limited. This paper presents the first multi-programme estimate of tourism-related EU funding between 2007 and 2020, covering eleven major programmes. An estimated €5.45 billion—2.23 % of total EU funding—was allocated, primarily through regional and structural funds. Support from other instruments was marginal, despite tourism's multisectoral relevance. The findings reveal spatial disparities linked to institutional capacity and governance structures, reflecting broader challenges associated with project-based funding. This study contributes to ongoing policy debates around the future Multiannual Financial Framework (2028–2034) and the EU Sustainable Tourism Strategy, calling for more coherent and inclusive support for tourism across Member States. •Tourism funding remains low despite its economic and social importance in the EU.•Uneven spatial distribution raises concerns about equitable access.•Greater data transparency is needed to better assess the funding landscape.•Findings contribute to policymaking for the next EU Multiannual Financial Framework.
Abstract: The paper assesses the geographical distribution at NUTS2-level of European Union-funded investments related to artificial intelligence (AI) during the programming period 2014–2020. It also examines the relationship between this specialization pattern and regional characteristics using a spatial autoregressive model. The results show that in the period 2014–2020, around EUR 8 billion of EU funds were targeted for AI investments in the European regions. More developed regions have a higher specialization in AI EU-funded investments. This specialization also generates spillover effects that enhance similar specialization patterns in neighbouring regions. AI-related investments are more concentrated in regions with a higher concentration of ICT activities and that are more innovative, highlighting the importance of agglomeration effects. Regions that have selected AI as an innovation priority for their Smart Specialization Strategies are also more likely to have a higher funding specialization in AI.
Abstract: Subsidies should target firms with profitable opportunities and insufficient funding, but this is difficult due to information asymmetry between firms and the government. We study how credit history of firms can help design more efficient subsidies. To this end, we combine data on non-repayable firm subsidies and the credit registry from Hungary. Using subsidy winners and losers as treated and control groups and leveraging variation in access to loans, we identify the differential impact of subsidies. While subsidies lead to an incremental impact on assets of loan-deprived as compared to loan-acquiring firms, the impact is transitory and fades after a few years. The impact on profitability follows a similar pattern despite the higher expected marginal value of capital for loan-deprived firms. Thus, loan deprivation is likely caused by borrower shortcomings instead of credit rationing by banks. In such cases, subsidies need not target loan-deprived firms.
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