Contents -- I. Introduction -- II. Review of the Literature -- III. The Model -- IV. Channels for EU Funds to Recipient Countries -- V. Combining the Channels: What do Current Plans Imply for the Macro Economy -- VI. Four Lessons for Policy-Makers -- VII. Conclusion -- References -- Figures -- 1. Convergence Scenario (baseline for shocks), 2003-40 -- 2. EU Transfers to Households' Income Support -- 5. EU Transfers to Public Infrastructure Investment -- 6. EU Transfers to Private Investment -- 2. Average EU Funds Spending -- 7. Actual Plans for EU Transfers -- 8. Role of a Pro-Cyclical Policy on the Impact of EU Funds, Comparison with the Baseline Scenario of Counter-Cyclical Fiscal Policy -- Tables -- 1. Selected Calibration Parameters -- 2. Change in Welfare in Each of the Scenarios -- 3. Ratio of Net Present Value of GDP Gains to NPV of EU Funds Disbursement -- Appendices -- I. EU Funds: What is in the Offing? -- II. Modifications to GIMF -- III. List of Parameters Used for the Calibration of the Model -- Appendix Figures -- 1. Average EU Funds Spending -- 2. EU Funds Payments and Relative GDP per Capita -- 3a. Central Europe: EU Funds Spending, 2004-15 -- 3b. Baltics: EU Funds Spending, 2004-15 -- 4a. EU Fund Transfer Shock, 2003-40 -- 4b. EU Fund Transfer Shock, 2003-40 -- 4c. EU Fund Transfer Shock, 2003-40 -- 4d. EU Fund Transfer Shock, 2003-40 -- 5a. IT Countries: EU Fund Transfer Shock, 2003-40 -- 5b. IT Countries: EU Fund Transfer Shock, 2003-40 -- 5c. IT Countries: EU Fund Transfer Shock, 2003-40 -- 5d. IT Countries: EU Fund Transfer Shock, 2003-40 -- 6a. FE Countries: EU Fund Transfer Shock, 2003-40 -- 6b. FE Countries: EU Fund Transfer Shock, 2003-40 -- 6c. FE Countries: EU Fund Transfer Shock, 2003-40 -- 6d. FE Countries: EU Fund Transfer Shock, 2003-40.

7. FE Countries: EU Fund Transfer Shock, 2003-40. Sensitivity Analysis with Price And Quantity Adj. Costs of a Flexible Exchange Rate Regime.