News

Government investment and fiscal stimulus

Government investment and fiscal stimulus

Fiscal stimulus packages typically feature large investment in infrastructure. The column argues that the fiscal multiplier connected with government investment through the Great Recession was near zero. Meanwhile, the federal government consumption multiplier was around 0.8. Estimates of the multiplier for total government purchases usually do not distinguish both of these effects, which might affect their validity.

Related

Through the Great Recession, governments enacted fiscal stimulus packages to combat the decline in economic activity. Significant shelling out for long-lived investment goods was common to these policies. In america, for example, the American Recovery and Reinvestment Act of 2009 contained provisions to improve funding to spend a lot more than $70 billion on infrastructure and transportation. 1