World Economy and Policy 2026, 2026(2):1

The EU Budget in Times of Crisis: The Importance of the Short‑Term Stabilisation Effect of the ESIF

Eliška Sankotová
Prague University of Economics and Business, Faculty of International Relations, Department
of International Economic Relations, nám. W. Churchilla 1938/4, 130 67 Prague 3 (Žižkov)

Against the backdrop of recurring crises, the limited flexibility and capacity of the EU budget to respond to economic shocks has been highlighted. This article examines whether transfers from the European Structural and Investment Funds fulfil a short-term macroeconomic stabilisation function within the EU budget. The aim is to empirically verify the countercyclical effect of the ESIF in relation to the stabilisation of gross national income. The analysis uses a VAR model and an impulse response function based on data for the period 1986-2026. The results show that the ESIF do not exhibit a statistically significant short-term stabilising effect in the classical sense of automatic fiscal stabilisers. Impulse responses indicate only a weak and delayed, time-limited, countercyclical effect. In conclusion, the article states that the ESIF contribute primarily to indirect and delayed stabilisation, with their effect being conditioned by institutional arrangements and being more pronounced in times of crisis.

Keywords: EU budget, ESIF, cohesion policy, countercyclical fiscal policy, stabilisation function of the EU budget, short-term fiscal stabilisation through ESIF
JEL classification: E32, E62

Published: August 1, 2026  Show citation

ACS AIP APA ASA Harvard Chicago Chicago Notes IEEE ISO690 MLA NLM Turabian Vancouver
Sankotová, E. (2026). The EU Budget in Times of Crisis: The Importance of the Short‑Term Stabilisation Effect of the ESIF. World Economy and Policy, 2026(2), 1
Download citation
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Open full article

    References

    1. Asdrubali, P. and Kim, S. (2008) 'The Economic Effects of the EU Budget: A VAR Analysis', Journal of Common Market Studies, 46(5), pp. 933-968. Available at: https://doi.org/10.1111/j.1468-5965.2008.00825.x. Go to original source...
    2. Bachtler, J., Mendez, C. and Wishlade, F. (2019) 'Reforming the MFF and Cohesion Policy 2021-27: pragmatic drift or paradigmatic shift?', European Policy Research Paper [Preprint], (107). Available at: https://eprc-strath.org/publication/reforming-the-mff-and-cohesion-policy-2021-27-pragmatic-drift-or-paradigmatic-shift/ (Accessed: 15 October 2025).
    3. Barca, F. (2009) An agenda for a reformed cohesion policy. A place-based approach to meeting European Union challenges and expectations, p. 218. Available at: https://www.europarl.europa.eu/meetdocs/2009_2014/documents/regi/dv/barca_report_/barca_report_en.pdf (Accessed: 10 November 2025).
    4. Bayoumi, T. and Masson, P.R. (1995) 'Fiscal flows in the United States and Canada: Lessons for monetary union in Europe', European Economic Review, 39(2), p. 253. Go to original source...
    5. Bayoumi, T. and Masson, P.R. (1998) 'Liability-Creating Versus Non-Liability-Creating Fiscal Stabilization Policies: Ricardian Equivalence, Fiscal Stabilization, and EMU'. IMF. Available at: https://www.imf.org/en/Publications/WP/Issues/2016/12/30/Liability-Creating-Versus-Non-Liability-Creating-Fiscal-Stabilization-Policies-Ricardian-2681 (Accessed: 20 October 2025).
    6. Becker, S., Egger, P. and Von Ehrlich, M. (2017) 'Effects of EU Regional Policy: 1989-2013', Regional Science and Urban Economics, 69. Available at: https://doi.org/10.1016/j.regsciurbeco.2017.12.001. Go to original source...
    7. Becker, S.O. et al. (2010) 'Going NUTS: The effect of EU Structural Funds on regional performance', Journal of Public Economics, 94(9-10), pp. 578-590. Go to original source...
    8. Bisciari, P. et al. (2021) 'The EU budget and the Next Generation EU Recovery Plan: a game changer?', NBB Economic Review, p. 39.
    9. Casas, P. et al. (2025) The updated RHOMOLO impact assessment of the 2014-2020 European cohesion policy (Including REACT-EU), European Commission. Available at: https://ec.europa.eu/regional_policy/whats-new/newsroom/15-07-2025-the-macroeconomic-impact-of-the-2014-2020-european-cohesion-policy-programmes_en (Accessed: 23 March 2026).
    10. Ciani, E. and de Blasio, G. (2015) 'European structural funds during the crisis: evidence from Southern Italy', IZA Journal of Labor Policy, 4. Available at: https://doi.org/10.1186/s40173-015-0047-4. Go to original source...
    11. Crescenzi, R. and Giua, M. (2019) 'One or many Cohesion Policies of the European Union? On the differential economic impacts of Cohesion Policy across member states', Regional Studies, 54, pp. 1-11. Available at: https://doi.org/10.1080/00343404.2019.1665174. Go to original source...
    12. Darvas, Z., Mazza, J. and Midoes, C. (2019) How to improve European Union cohesion policy for the next decade. Research Report 2019/8. Bruegel Policy Contribution. Available at: https://www.econstor.eu/handle/10419/208039 (Accessed: 8 November 2025).
    13. Dullien, S. and Schwarzer, D. (2009) 'Bringing Macroeconomics into the EU Budget Debate: Why and How?', Journal of Common Market Studies, 47(1), pp. 153-174. Go to original source...
    14. European Commission (2017) Reflection paper on the future of EU finances. Brussels: European Union. Available at: https://op.europa.eu/en/publication-detail/-/publication/5f9c0e27-6519-11e7-b2f2-01aa75ed71a1.
    15. European Commission (2018) 'A Modern Budget for a Union that Protects, Empowers and Defends. The Multiannual Financial Framework for 2021-2027'. Brussels. Available at: https://eur-lex.europa.eu/resource.html?uri=cellar:c2bc7dbd-4fc3-11e8-be1d-01aa75ed71a1.0023.02/DOC_2&format=PDF (Accessed: 19 April 2020).
    16. European Commission (2025a) 'Capital Formation and Saving, Total Economy and Sectors. Download annual data set of the macro-economic database AMECO'. Available at: https://economy-finance.ec.europa.eu/economic-research-and-databases/economic-databases/ameco-database/download-annual-data-set-macro-economic-database-ameco_en (Accessed: 7 April 2026).
    17. European Commission (2025b) 'National income. Download annual data set of the macro-economic database AMECO'. Available at: https://economy-finance.ec.europa.eu/economic-research-and-databases/economic-databases/ameco-database/download-annual-data-set-macro-economic-database-ameco_en (Accessed: 7 April 2026).
    18. European Court of Auditors (2023) Adapting cohesion policy rules to respond to COVID-19: funds used more flexibly, but reflection needed on cohesion policy as a crisis response tool. LU: Publications Office (Special report No ... (European Court of Auditors. Online)). Available at: https://data.europa.eu/doi/10.2865/352658 (Accessed: 17 March 2026).
    19. European Union (2025) 'Historic EU payments annual timeseries - regionalised and modelled. Cohesion Open Data'. Available at: https://cohesiondata.ec.europa.eu/Other/Historic-EU-payments-annual-timeseries-regionalise/tc55-7ysv/about_data (Accessed: 7 April 2026).
    20. European Union (2026a) '2021-2027 EU payment details (timeseries). Cohesion Open Data'. Available at: https://cohesiondata.ec.europa.eu/2021-2027-Finances/2021-2027-EU-payment-details-timeseries-/pbbz-hmfu/about_data (Accessed: 7 April 2026).
    21. European Union (2026b) 'ESIF 2014-2020 EU payments (daily update) timeseries. Cohesion Open Data'. Available at: https://cohesiondata.ec.europa.eu/2014-2020-Finances/ESIF-2014-2020-EU-payments-daily-update-timeseries/gayr-92qh/about_data (Accessed: 7 April 2026).
    22. Ferrer, J.N. and Alcidi, C. (2018) 'Should the EU budget have a stabilisation function?', Centre for European Policy Studies, p. 2.
    23. Ferrer, J.N. and Katarivas, M. (2014) 'What are the effects of the EU budget: Driving force or drop in the ocean?', Centre for European Policy Studies, 2014(86), p. 37.
    24. Ferrer, J.N. and Rinaldi, D. (2017) 'Towards an EU budget with an effective stabilization function', FIRSTRUN, p. 27.
    25. Greene, W.H. (2003) Econometric Analysis. Fifth Edition. Upper Saddle River: Prentice Hall.
    26. OECD (2020) 'Strengthening Governance of EU Funds under Cohesion Policy'. OECD Publishing. Available at: https://www.oecd.org/en/publications/strengthening-governance-of-eu-funds-under-cohesion-policy_9b71c8d8-en.html (Accessed: 15 October 2025).
    27. Pasimeni, P. and Riso, S. (2019) 'Redistribution and stabilisation through the EU budget', Economia Politica, 36(1), pp. 111-138. Available at: https://doi.org/10.1007/s40888-018-0136-0. Go to original source...
    28. Rousek, P. (2020) 'Evaluation of the EU Policy Concerning the Basic Economic Functions of a Modern Government in a Mixed Economy', SHS Web of Conferences, 73. Available at: https://doi.org/10.1051/shsconf/20207301024. Go to original source...
    29. Spilioti, N. and Anastasiou, A. (2024) 'European Structural and Investment Funds (ESIFs) and Regional Development across the European Union (EU)', Journal of Risk and Financial Management, 17(6), p. 228. Available at: https://doi.org/10.3390/jrfm17060228. Go to original source...
    30. Staehr, K. and Urke, K. (2022) 'The European structural and investment funds and public investment in the EU countries', Empirica, 49(4), pp. 1031-1062. Available at: https://doi.org/10.1007/s10663-022-09549-6. Go to original source...
    31. Vita, V. (2017) 'Revisiting the Dominant Discourse on Conditionality in the EU: The Case of EU Spending Conditionality', Cambridge Yearbook of European Legal Studies, 19, pp. 116-143. Available at: https://doi.org/10.1017/cel.2017.4. Go to original source...

    This is an open access article distributed under the terms of the Creative Commons Attribution 4.0 International License (CC BY 4.0), which permits use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.


    Return to the content