multipliers—and a lower response of investment—when using the raw disbursements of EU funds instead of the recently released adjusted estimates of the timing of spending. Estimated cumulative multipliers of up to two years after the initial spending are typically insignificant, suggesting that results are not driven by a delayed response of short-term GDP.

We subjected our results to a range of robustness tests to check that they are not caused by outliers, influential individual observations, or omitted variables. First, because growth rates in smaller regions are often very volatile, we winsorize all our growth data—though we also find little robust evidence of large relative multipliers even using non-winsorized data, or when winsorizing at different levels.<sup>9</sup> Second, we carefully check for influential observations by rerunning all regressions dropping countries and years one-byone, and omitting two country-year observations that are extremely influential.<sup>10</sup> Finally, our default approach includes both time and region fixed effects, as well as the one-year lagged growth rates. We also fail to find large multipliers adding other controls in the literature (including institutional indicators).

We also consider some extensions to try to understand the heterogeneity and economic mechanisms behind our multiplier estimates. In contrast with some of the literature, we find little evidence of regional spillovers—spending in a region boosting growth in neighboring regions. Even when we disaggregate our sample beyond CEE vs non-CEE countries—into northern CEE vs southern CEE blocks, for example—we also find little robust evidence of large regional multipliers. The same is true when we split our sample in the time dimension or consider results separately for different EU funds.<sup>11</sup> We also find some suggestive evidence of some negative anticipation effects (one year ahead of EU fund spending) at the subnational level, partially driven by anticipated falls in investment (mostly in non-CEE countries). This could be because some investment is put off until it is eligible for EU funding, though more research is needed to test this hypothesis.

**Contribution and related literature.** Our paper contributes to a recent literature on the short-run growth impacts of EU fund spending in different countries and regions. We differ from the empirical literature mostly in terms of conclusions—we do not find evidence of large short-term multipliers—and we also offer some methodological improvements.

Coelho (2019) is the first paper to estimate short-run fiscal multipliers on EU spending, and, like us, she uses NUTS2 subnational data. Our paper seeks to improve on Coelho’s pioneering paper in three main ways: data quality, controlling for region-specific effects, and using an alternative instrumental variable (IV) approach. First, Coelho (2019) did not observe EU Fund expenditures at the NUTS2 level, and instead she interpolated them using country-level disbursement schedules combined with NUTS2 commitments. We have access to more recent data which should improve the accuracy of the estimates. Second, Coelho’s interpolation

> 9 Winsorizing is a less extreme approach than dropping outliers. Rather than dropping the extreme observations, winsorizing keeps them in the sample but rounds them to a bound.

> 10 The differences between our country-level results and those of Durand and Espinoza (2021) are mostly due to the selection of influential observations. Other approaches in the literature drop periods with austerity programs or drop observations that Cook’s distance or standardized residuals deem to be influential, often resulting in more dropped observations. Often these dropped observations are non-random; Coelho (2009, p582) finds these “are mostly observations with abnormally sharp output fluctuations and very low transfers changes”.

> 11 While there is some tentative evidence of an all-Europe subnational multiplier above one for the Cohesion Fund (mostly environmental and transport investment), it is surprisingly insignificant for the CEE sample that receives most of the funds.

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