Government Investment and Fiscal Stimulus

WPIEA2010229 Image
Price:  $18.00

Author/Editor: Eric M. Leeper, Todd B. Walker, Shu-Chun S. Yang
Release Date: © October, 2010
ISBN : 978-1-45520-894-4
Stock #: WPIEA2010229
Stock Status: On back-order

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Effects of government investment are studied in an estimated neoclassical growth model. The analysis focuses on two dimensions that are critical for understanding government investment as a fiscal stimulus: implementation delays for building public capital and expected fiscal adjustments to deficit-financed spending. Implementation delays can produce small or even negative labor and output responses to increases in government investment in the short run. Anticipated fiscal adjustments matter both quantitatively and qualitatively for long-run growth effects. When public capital is insufficiently productive, distorting financing can make government investment contractionary at longer horizons.


Economic policy , Fiscal policy

More publications in this series: Working Papers

More publications by: Eric M. Leeper ; Todd B. Walker ; Shu-Chun S. Yang