country level than subnational level. While OLS estimates are often statistically larger for CEE than non-CEE countries at the subnational level, for all other specifications they are insignificantly different.<sup>44</sup> Panel A of Table 1 presents OLS estimates of Equation 1, which are subject to the caveat that there may be some endogeneity on the timing of disbursements (though total disbursements are fixed in advance at the beginning of the EU programming period). Panel B1 presents the second-stage IV estimates (Equation 1, but using predicted rather than actual payments), and Panel B2 reports the IV first-stage estimates of . 1 is the impact multiplier (our coefficient of interest), the relative € increase in GDP in year _t_ from a relative 1€ increase in EU funds. θθ ββ

**Table 1: Main Impact Multipliers for EU Structural and Investement Fund Spending**

||<br>**NUTS2**|**Subnational R**|**egions**|<br>**C**|**ountry Leve**|**l**|
|---|---|---|---|---|---|---|
||**1. All Europe**|**2. CEE**|**3. Non-CEE**|**4. All Europe**|**5. CEE**|**6. Non-CEE**|
||||**Panel**|**A: OLS**|||
|**Impact Multiplier**|0.15**|0.67***|-0.06|0.80**|1.22|0.20|
|**(β0)**|(0.08)|(0.17)|(0.11)|(0.29)|(0.68)|(0.47)|
|Obs|3,930|921|3,009|416|161|255|
|Controls/FEs:||Year|FE,State FEs,|Lagged GDP Gro|wth||
|||**Panel B.1**|**: Instrumental**|**Variables (Secon**|**d stage)**||
|**Impact Multiplier**|-0.02|0.13|-0.14|0.67*|4.89|0.26|
|**(β0)**|(0.09)|(0.21)|(0.15)|(0.34)|(3.43)|(1.19)|
|Obs|3,930|921|3,009|416|161|255|
|Controls/FEs:||Year|FE,State FEs,|Lagged GDP Gro|wth||
|||**Panel B**|**.2: Instrument**|**al Variables (First**|**stage)**||
|**Coeff (θ) on Leave-**|0.90***|0.90***|0.80***|0.82***|0.35|0.66***|
|**one-out spending**|(0.03)|(0.04)|(0.10)|(0.09)|(0.23)|(0.14)|
|F-stat|684.1|546.6|65.28|91.48|2.296|22.85|

Notes: Robust Standard Errors shown in parentheses (clustered at the NUTS2 for NUTS2 regressions). OLS and IV (second stage) are regressions on the annual growth rate of real GDP on the scaled "modelled" EU spending. Country level regressions exclude influential observations Croatia (2016) and Estonia (2011) discussed in the text. Dependent variable is winsorized at the 90% level at NUTS2 level and at 98% level at country level. *, ** and *** stars indicate significance at the 10%, 5% and 1% levels (respectively). CEE is Central and Eastern Europe. See Equation 1 (OLS/IV second stage) and Equation 6 (IV first stage).

At the _subnational level_ (Table 1, Columns 1-3) most multiplier estimates are insignificant and close to zero, except for a modest and significant multiplier of 0.67 for Central and Eastern European (CEE) countries in the OLS specification (Panel A, Column 2). These estimates are generally “precise zeros” – standard errors range from 0.08 to 0.21 – which means insignificance is driven by the small point estimates and not by lack of precision.<sup>45</sup> We can always reject that multipliers at the subnational level are above 1 at the 95% significance level. Interestingly, the first stage at the subnational level is extremely strong for CEE countries, with a θ coefficient in Equation 5 of close to unity, suggesting that on average a 1€ increase in predicted EU spending increases actual spending by close to 1€. The first-stage [weak instrument] F statistics are over 500 for the

> 44 OLS CEE point estimates are also larger at the country level, but standard errors are too large for the difference to be significant.

> 45 For example, if the point estimate of the multiplier was 1 (rather than 0-0.6 as currently), then the t-statistics in the subnational sample would range from 4 to 12.

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