**Table 3: Two-year Cumulative Multipliers for EU 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**|||
|**Cumulative 2 year**|0.14|0.62***|-0.01|0.68|1.13|-0.23|
|**Multiplier (β2)**|(0.10)|(0.20)|(0.14)|(0.41)|(0.80)|(0.53)|
|Obs|3,698|866|2,832|389|149|240|
|Controls/FEs:||Year|FE,State FEs,|Lagged GDP Gro|wth||
|||**Panel B.1**|**: Instrumental**|**Variables (Secon**|**d stage)**||
|**Cumulative 2 year**|-0.04|0.05|0.02|0.64|4.88*|-1.19|
|**Multiplier (β2)**|(0.13)|(0.29)|(0.23)|(0.39)|(2.85)|(1.21)|
|Obs|3,698|866|2,832|389|149|240|
|Controls/FEs:||Year|FE,State FEs,|Lagged GDP Gro|wth||
|||**Panel B**|**.2: Instrument**|**al Variables (First**|**stage)**||
|**Coeff (θ) on Leave-**|0.92***|0.92***|0.89***|0.84***|0.53**|0.78***|
|**one-out spending**|(0.03)|(0.03)|(0.11)|(0.07)|(0.26)|(0.19)|
|F-stat|840.2|718.2|71.74|168|4.055|17.47|

Notes: This table is the same as Table 1, except that instead of the impact mutliplier we estimate cumulative multipliers as in Equation 2.

The estimated two-year multipliers are displayed in Table 3 and suggest that cumulative multipliers are generally insignificantly different from zero and point estimates are slightly smaller than the impact multipliers in Table 1.<sup>51</sup> OLS multipliers in Panel A are generally insignificant, except for a subnational CEE sample, which is significant at the 1% level (point estimate of 0.62).<sup>52</sup> IV estimates in Panel B are always insignificant at the 5% level. The subnational multipliers are “precise zeros” where we can reject a multiplier above 1 at the 95% level, though country-level multipliers in the CEE/non-CEE subsamples are imprecisely estimated. Except for the CEE country-level sample, first-stage coefficient estimates are close to 1 and F-stats are very large.<sup>53</sup> Three-year cumulative multipliers are generally either insignificant or can even turn slightly negative (Online Appendix Table A3.6).

51 Two-year cumulative multipliers are the sum of the impact and the “long difference” multipliers which take the two- <u>, ,</u> L <u>� , , �</u> year difference in both GDP and EU spending: _._ The longrr rr rr rr yyii tt+HH−1−yyii tt−1 ggii tt+HH−1−ggii tt−1 difference estimates, displayed in Online Appendix Table A3.7, are smaller than the contemporaneous multipliers. yyii,tt−1rr = ββHH yyii,tt−1rr + δδXXii,tt + γγii + γγtt + eeii,tt 52 An alternative specification is regressing growth over longer periods on the one-year spending shock: <u>, ,</u> = rr rr yyii tt+HH−1−yyii tt−1 <u>, �</u> _._ Online Appendix Table A3.8 shows that these “forward multipliers” are yyii,tt−1rr rr rr FF<sup><u>�ggii,tt</u></sup> −ggii tt−1 ββ insignificant at the country level, but similar (OLS) or much larger and significant (2SLS) at the sub-national level. HH yyii,tt−1rr + δδXXii,tt + γγii + γγtt + eeii,tt However, because EU spending shocks tend to be positively correlated over time, this multiplier specification overstates the economic effect of spending shocks. 53 The instrument here is the sum of cumulative change in predicted spending: ∑h=0 I I . Cumulative multipliers also drop influential observations that appear in the forward years: for example, we drop Croatia 2016 in for HH−1 ,rr ,rr rr ii,tt+h ii,tt−1 ii,tt−1 impact multipliers, Croatia 2015-16 in the two-year multipliers and Croatia 2014-16 in three-year cumulative multipliers (gg −gg )/yy as all these observations include the initial Croatia 2016 influential observation.

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