1994-1999. The manner in which we execute this macro-sectoral impact evaluation
exercise is as follows:
We carry out a model simulation starting in the year 1993 (the year before Structural
Funds 94-99 was implemented), and continue the simulation out to the year 2010, i.e.,
eleven years after the termination of Structural Funds, 94-99.
For the purposes of isolating the separate impacts of Structural Funds 94-99, we
ignore the carry-over impacts of Structural Funds 89-93, as well as the continuation of
Structural Funds aid under the current Structural Funds 2000-2006. It will be recalled
that in the data presented in section 2, the actual outturn for the period 1994-2000
(when available) was presented. Thus, this outturn included the carry-over from
Structural Funds 89-93, the implementation of Structural Funds 94-99, and the niitial
year of Structural Funds 2000-2006 (when available). Simple examination of the
outturn can present a misleading impression of the likely role played by Structural
Funds 94-99 in isolation from other Structural Funds.
We then “extract” the Structural Funds 94-99 policy shocks, i.e., we set the Structural
Funds 94-99 expenditures at zero and re-simulate the model.7 No other changes are
made, and no attempt is made to design a “substitute” domestically funded public
investment programme that would have replaced a “missing” Structural Funds 94-99.
This is a very artificial assumption, since in the absence of Structural Funds 94-99
there almost certainly would have been substitute domestically funded public
investment programme, albeit smaller in magnitude.
Ideally we should use the actual ex-post realised Structural Funds expenditures. But
these were not available for every country or region.8 In the interests of uniformity, in
this section we have used the planned Structural Funds expenditure data as contained
in the Structural Funds 94-99 treaty documents. While these give a fairly accurate
7 It might be held that, in the absence of such large-scale public policy shocks, the underlying structure
of the economies would have changed and that the use of HERMIN models calibrated with Structural
Funds-inclusive data is invalid (the so-called “Lucas critique” of the use of econometric models to
analyse policy impacts). However, the HERMIN models contain explicit sub-models of the structural
changes that are associated with the operation of the Structural Funds, so the validity of the Lucas
critique is weakened.
8 Complete ex-post Structural Funds 1994-99 data were only available for Northern Ireland , Portugal
and Ireland.
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