THE STATE

Quantifying the Macroeconomic and Fiscal Effects of Selected Infrastructure and Education Investments in Germany.

Tom Krebs and Martin Scheffel, University of Mannheim Working Paper, September 2016.

BY

FORUM NEW ECONOMY

PUBLISHED

1. NOVEMBER 2019

Which investment the state should engage and which should it leave  to the private sector? One way to answer this question is to estimate economic and fiscal returns. An important work in this sense has been done by one of the Forum’s academic partners, Tom Krebs in 2016. Krebs and Scheffel show that higher investment in education and infrastructure would improve economic outcomes and strengthen long-term public finances. For example, increased public spending on child-care would increase employment and lower inequality.

 

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ABOUT THE STATE

KNOWLEDGE BASE

For decades, there was a consensus that reducing the role of the state and cutting public debt would generate wealth. This contributed to a chronic underinvestment in education and public infrastructure. New research focuses on establishing when and how governments need to intervene to better contribute to long-term prosperity and to stabilize rather than aggravate economic fluctuations.

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