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Is Infrastructure Spending an Effective Fiscal Policy?
Author(s) -
Yanushevsky Camilla,
Yanushevsky Rafael
Publication year - 2014
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/meca.12034
Subject(s) - economics , fiscal policy , stimulus (psychology) , investment (military) , macroeconomics , debt , monetary economics , government spending , government (linguistics) , government debt , economic policy , market economy , psychology , linguistics , philosophy , politics , political science , welfare , law , psychotherapist
Abstract The impact of expansionary fiscal policy intended to increase economic growth by using infrastructure‐focused stimulus packages is analyzed by considering the debt to GDP ratio dynamics model. It is shown that for the data characterizing the current state of the US economy the government investment in infrastructure cannot decrease the debt to GDP ratio. The paper contributes to the ongoing fiscal policy debate whether government investment in infrastructure is an effective approach to boost the economy.