**Table 2: Effect of EU funds on Total Investment**

||<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 Investment**|0.63***|0.95***|0.14|0.97***|1.22**|-0.11|
|**Multiplier (β0)**|(0.12)|(0.17)|(0.17)|(0.30)|(0.39)|(0.41)|
|Obs|3,897|921|2,976|416|161|255|
|Controls/FEs:||Year|FE,State FEs,|Lagged GDP Gro|wth||
|||**Panel B.1**|**: Instrumental**|**Variables (Secon**|**d stage)**||
|**Impact Investment**|0.92***|1.01***|0.57**|1.17***|3.68|-0.09|
|**Multiplier (β0)**|(0.13)|(0.24)|(0.23)|(0.41)|(3.19)|(1.19)|
|Obs|3,897|921|2,976|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|683.6|546.6|64.89|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 change of investment as share of GDP on the scaled "modelled" EU Spending. Country level regressions exclude influential observations Croatia (2016) and Estonia (2011) discussed in the text. GDP growth (as a control) is winsorized at the 90% level for NUTS2 regions and at 98% for country level regressions (though investment data is not winsorized). *, ** 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).

Table 2 shows that EU funds tend to boost investment, with all-Europe and CEE total investment multipliers often being close to 1 (against smaller and insignificant investment multipliers for non-CEE countries). This suggests that we are capturing actual changes in investment driven by EU funds. At the NUTS2 level, we find that an extra 1€ of EU funds spending in CEE countries boosts total investment by around 1€ (OLS and IV) with both being statistically significant at the 1% and we are unable to reject an investment multiplier of 1. At the country level, CEE OLS multipliers are also close to 1, but IV multipliers are imprecisely estimated due to weak instruments. For the all-Europe sample the subnational- and county-level investment multiplier is significant and usually around 1 for both the OLS and 2SLS specifications except for an OLS NUTS2 multiplier which is smaller at around 0.6 (though still significant). For non-CEE countries, investment multipliers are smaller and sometimes insignificant (IV of 0.57 significant at 5% being larger than insignificant 0.14 of OLS), and for OLS are significantly smaller than CEE investment multipliers. This is not surprising as most EU structural fund spending is focused on Central and Eastern Europe.

_Robustness._ We conduct three robustness tests of the investment multiplier results: (i) using raw (rather than modeled) payments, (ii) splitting total investment into public investment and private investment portions (which is only available at the country level) and (iii) using winsorized investment data (our default specification is non-winsorized).

First, if we used raw EU payments on the right-hand side (instead of using modeled EU payments), the estimated investment multipliers are substantially smaller in all cases (see Online Appendix Table A3.2). As measurement errors often lead to attenuation bias, this suggests that modeled payments may be more 16