Is Infrastructure Spending an Effective Fiscal Policy?

The impact of expansionary fiscal policy intended to increase economic growth by using infrastructure-focused stimulus packages is analyzed by considering the debt to GDP ratio dynamics model. It is shown that for the data characterizing the current state of the US economy the government investment in infrastructure cannot decrease the debt to GDP ratio. The paper contributes to the ongoing fiscal policy debate whether government investment in infrastructure is an effective approach to boost the economy. [ABSTRACT FROM AUTHOR]