THE STATE

The Macroeconomic Effects of Public Investment: Evidence from Advanced Economies

Abiad, Furceri and Topalova find that increased public infrastructure investment raises output in both the short and long term, particularly during periods of economic weakness. With borrowing costs low, countries with infrastructure needs should boost spending.

BY

MARC ADAM

PUBLISHED

1. NOVEMBER 2019

READING TIME

1 MIN.

Abiad, Furceri and Topalova find that increased public infrastructure investment raises output in both the short and long term, particularly during periods of economic weakness. With borrowing costs low, countries with infrastructure needs should boost spending.

PREVIOUS ARTICLE Austerity: The history of a Dangerous Idea
NEXT ARTICLE Populism and the economics of globalization

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.

ARTICLE OVERVIEW