The European Central Bank published a working paper assessing whether the EU’s Recovery and Resilience Facility (RRF) has improved institutional quality in major recipient Member States, using Worldwide Governance Indicators data through 2024 and a Bayesian synthetic control model. The paper finds early, economically meaningful RRF-related improvements in Italy, while evidence for other large recipients ranges from suggestive to limited. The analysis treats 2022-24 as the intervention period and focuses on countries with an RRF envelope exceeding 10% of GDP (Greece, Croatia, Spain, Italy, Portugal, Poland and Bulgaria), benchmarking them against peer countries with little or no RRF exposure. In the baseline specification, the posterior probability of a positive effect averages 0.77 across beneficiaries and is close to 1 for Italy; Italy’s estimated mean impact is about 0.25 index points, implying a 16.8% reduction in its distance to an institutional-quality “frontier” by 2024. Bulgaria, Croatia and Greece show positive mean estimates but with substantial uncertainty and credible intervals that often include zero, while Poland’s mean estimate is negative across specifications and Portugal and Spain’s positive baseline results are not robust. Differences are described as broadly consistent with national plan implementation speed and reform mix, with Italy standing out as a faster implementer and having a higher share of governance-related reforms. The paper cautions that the programme is ongoing through 2026, indicators are perception-based and may adjust slowly, and estimates for some countries may be confounded by processes such as euro adoption and Schengen entry, implying that firmer conclusions require additional years of data.
European Central Bank 2026-03-31
European Central Bank working paper uses Bayesian synthetic control to assess Recovery and Resilience Facility effects and finds robust institutional quality gains in Italy
The European Central Bank published a working paper assessing the impact of the EU’s Recovery and Resilience Facility on institutional quality in major recipient Member States using Worldwide Governance Indicators and a Bayesian synthetic control model. The paper finds early, economically meaningful improvements in Italy, while evidence for other large recipients is mixed and often statistically uncertain, and cautions that firmer conclusions will require more data given the programme’s ongoing nature and perception-based indicators.