Supply Side Effects of Infrastructure Spending

Abstract

We study the impact of stimulus infrastructure spending on the road construction industry. We find that a decline in private construction during the Great Recession led to a marketable increase in firm participation in the road construction industry. This short-term change in participation translated into longer term benefits for the survival of firms in this concentrated industry. Infrastructure spending increased market competitiveness even after he funds were expended.

Keywords: Procurement Auctions, Stimulus Spending, Firm Exit