European Parliament Library

Government Investment and Fiscal Stimulus, Susan Yang, Todd Walker, Eric Leeper

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
Table Of Contents
CONTENTS; I. Introduction; II. The Model; A. Households; B. Firms; C. Government; 1. Modeling the spending process; 2. Debt Financing; III. Estimation and Calibration; A. Estimation; B. Calibrated Parameters; 1. Productivity of public capital; 2. Spending rates; IV. Impacts of Government Investment; A. Implementation Delays; B. Fiscal Adjustments; 1. Financing method; 2. Financing speed; V. Present-Value Multipliers; VI. Concluding Remarks; Tables; 1. Cost estimation by the Congressional Budget Office.; 2. Prior and posterior distributions for the estimated parameters
Literary Form
non fiction
"October 2010."
Physical Description
1 online resource (32 p.)
Specific Material Designation
Form Of Item

Library Locations

  • EP Library Luxembourg

    Rue du Fort Thüngen, Luxembourg, L-1313, LU
  • EP Library Brussels

    60 rue Wiertz, Brussels, B-1047, BE
  • EP Library Strasbourg

    7 Place Adrien Zeller, Allée du Printemps, Strasbourg, F-67070, FR