Principles of Macroeconomics / Unit 15 MAC 1417 short lesson, about 20 seconds
Public Physical Capital
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The idea
Roads, ports, water systems, power networks and school buildings raise what the economy can produce, and private firms use them without building them. Public capital of this kind can raise output directly.
In practice
The study at 1407 found exactly this spending crowding private investment out.
Where people slip
Which projects get built is decided politically as well as economically, so value for money is not guaranteed.
Your place on the trail
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