Amidst a global battle for technological leadership in fast-changing and emerging industries, Europe has been losing competitiveness. Productivity remains weak. While innovation is taking place in the...

Intereconomics is an academic journal that publishes articles by experts on current economic and social policy issues affecting Europe.

Monopolkommission

The Covid-19 pandemic caused a global economic crisis, leading governments to provide substantial State Aid to support firms. This paper examines the effectiveness of Covid-related financial support in Spain and Italy, focusing on its impact on firm recovery. Using a difference-in-differences (DiD) approach combined with propensity score weighting, it compares outcomes of similar firms receiving aid to those without. The results show significant benefits for micro-firms, including mitigated turnover declines and increased investments in both tangible and intangible assets. The findings highlight the critical role of government support in business survival and recovery, especially for SMEs, during the pandemic.