Infrastructure Stimulus

We’re going to be hearing a lot about “stimulus” and infrastructure. Alex Tabarrok has pointed out that infrastructure may not mean what you think . It’s interesting to note that one of the major factors that got us to the point of needing huge infrastructure upgrades is government regulation of electricity prices. Utility commissions have wanted to keep prices low, which has kept utilities from being profitable enough to sufficiently invest in infrastructure. Can you say “unintended consequences”?

Massive government spending on infrastructure might be good for the nation in general, but some evidence suggests it won’t be an economic stimulus.

So, what would stimulate the economy? Professor Mankiw has an idea.

For a fuller description of the many sides of this debate, read this.

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