Abstract:This paper provides a critical review of the literature on the macroeconomic effects of public infrastructure investment associated with the main underlying transmission channels. Typically, this type of stimulus fosters economic activity in the medium-to-long run because the public capital stock needs time to build up and to exert its effects. However, under the current circumstances -such as considerable economic slack, policy rates constrained at zero and heightened uncertainty -the stimulus can be expansio… Show more
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