This paper analyses the economic impact of two tax credits ('Bonus Facciate'/facades bonus and 'Superbonus 110%'), which have been active in Italy since the second half of 2020 to stimulate the construction sector through investments aimed at improving the energy efficiency, seismic resistance, and aesthetics of residential buildings. The take-up of these measures was more than €170 billion in the period 2021-23 (about 3 per cent of GDP on average per year). Their effects are assessed by comparing the trends in residential investment spending in Italy and in some European countries that had not adopted similar programmes (using the 'synthetic control method').
We find that about a quarter of the spending related to subsidized investment (over €45 billion) would have been made even in the absence of the incentives. This result implies that the fiscal multiplier was lower than one, suggesting that the benefits for the economy as a whole in terms of value added were lower than the costs of the subsidies.
