What’s more, their study showed that the multiplier increases during a downturn. Leduc and Wilson found that the multiplier in the wake of the 2009 stimulus was “roughly four times” more than average.
Click here for complete article > Business Insider
November 30, 2012
A recently published working paper from the San Francisco Fed shows that the fiscal multiplier of infrastructure spending is much larger than the typical government spending multiplier.
Sylvain Leduc and Daniel Wilson studied the effect of unexpected infrastructure grants on state GDPs (GSPs) since 1990 and found that, on average, each dollar of infrastructure spending increases the GSP by at least two dollars. Valerie Ramey, Professor of Economics at UC San Diego and member of the National Bureau of Economic Research, reports that the typical fiscal multiplier is between 0.5 and 1.5…
Working Paper available here > Highway Grants: Roads to Prosperity? Federal Reserve Bank of San Francisco