Economic Analysis and Infrastructure Investment

Edward Glaeser and James Poterba

No 28215, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper summarizes economic research on investment in public infrastructure and introduces the findings of several new studies on this topic. It begins with a review of several potential justifications for the public sector’s involvement in building, financing, and operating infrastructure, including limitations of private capital markets, externalities, and the control of natural monopolies. It then describes the conditions that characterize an optimal infrastructure investment program, emphasizing the need to extend project-based microeconomic cost-benefit analysis to incorporate the value of economy-wide macroeconomic and other externalities. It notes the importance of efficient use of infrastructure capital, and discusses three areas -- procurement, project management, and expenditure on externality mitigation – where further research could identify paths to efficiency improvement. It concludes by identifying several trends that have emerged since outbreak of the COVID-19 pandemic that may have long-term effects on the role of both physical and digital infrastructure in the U.S. economy.

JEL-codes: H44 H76 R42 R53 (search for similar items in EconPapers)
Date: 2020-12
New Economics Papers: this item is included in nep-geo, nep-ppm and nep-tre
Note: PE
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Citations: View citations in EconPapers (5)

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Book: Economic Analysis and Infrastructure Investment (2021)
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