ABSTRACT

Infrastructure and the Economy [Updated November 29, 2021]   [open pdf - 1MB]

From the Summary: "Infrastructure investment has received renewed interest of late, with both President Biden and some Members of Congress discussing the benefits and costs of such spending and what investments should be considered part of infrastructure. 'Infrastructure investment' or 'infrastructure reform' can describe a wide array of activities in policy discussions, depending on the context. In general, infrastructure has historically referred to longer-lived, capital-intensive systems and facilities, such as roads, bridges, and water treatment facilities. Partly owing to the amorphous definition of 'infrastructure', there is no set method for measuring infrastructure investment. For public infrastructure, economists often use a measure called government investment. Infrastructure is a critical factor in the modern economy, enabling private businesses and individuals to produce goods and services more efficiently. With respect to overall economic output, increased public infrastructure spending generally leads to higher economic output in the short term by stimulating demand and in the long term by increasing overall productivity. The short-term impact on economic output largely depends on the type of financing (whether deficit-financed or deficit-neutral investment) and the state of the economy (whether in a recession or expansion). The long-term impact on economic output is also affected by the method of financing, due to the potential for 'crowding out' of private investment when investments are deficit financed. Economists also expect the type of infrastructure--whether in roads, railways, airports, utilities, or public buildings--to affect the impact on economic output."

Report Number:
CRS Report for Congress, R46826
Author:
Publisher:
Date:
2021-11-29
Copyright:
Public Domain
Retrieved From:
Congressional Research Service: https://crsreports.congress.gov/
Format:
pdf
Media Type:
application/pdf
URL:
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