The potential benefits of public capital investments are of two sorts -- market benefits and "quality of life" benefits.
In 1999, federal, state, and local governments together spent nearly $250 billion on nondefense infrastructure ranging from computers for office workers to land for new streets. Given this substantial public capital investment, it seems worthwhile to consider what effect it might have on national well-being, especially in metropolitan areas, where most Americans live and work. Perhaps surprisingly, there is little academic consensus on this fundamental question, despite more than a decade of close scrutiny. Andrew F. Haughwout is an economist at the Federal Reserve Bank of New York and assistant professor of public and international affairs at Princeton University. The view expressed here are the author's, not necessarily those of the Federal Reserve Bank of New York or the Federal Reserve System.
Thanks to Chris Steins
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