The Limits of Infrastructure Stimulus

5 Pages Posted: 26 Mar 2020

See all articles by Garett Jones

Garett Jones

George Mason University - Department of Economics; George Mason University - Mercatus Center

Daniel M. Rothschild

George Mason University - Mercatus Center

Date Written: March 25, 2020

Abstract

There is renewed interest in a significant economic stimulus package to build and improve public works infrastructure. The experience of the 2009 American Recovery and Reinvestment Act (ARRA) suggests that marrying the goals of infrastructure provision and putting unemployed individuals back to work is likely to result in a double disappointment: while some unemployed workers will be hired, many workers—especially high-skilled ones—will be shifting from another job rather than be hired directly from the unemployment lines.

Infrastructure spending should be evaluated mostly on the merits and value of the projects it funds and should not be seen as a reliable way to quickly increase aggregate demand or to put the newly unemployed back to work.

This brief highlights five findings from two empirical studies we released in 2011 on the microeconomic effects of the ARRA that should illuminate the current public debate on the response to the COVID-19 pandemic.

Keywords: infrastructure; federal budget; Novel coronavirus pneumonia; Corona virus disease 2019(COVID-19); COVID-19; 2019 novel coronavirus; 2019-nCoV; Corona Virus Disease 2019 (COVID-19)

JEL Classification: H54; H69

Suggested Citation

Jones, Garett and Rothschild, Daniel M., The Limits of Infrastructure Stimulus (March 25, 2020). Mercatus Special Edition Policy Brief (2020), Available at SSRN: https://ssrn.com/abstract=3561215 or http://dx.doi.org/10.2139/ssrn.3561215

Garett Jones (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

HOME PAGE: http://economics.gmu.edu/people/gjonesb

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

Daniel M. Rothschild

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

HOME PAGE: http://www.mercatus.org/people/daniel-m-rothschild

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