Highway Grants: Roads to Prosperity?

Source: Sylvain Leduc and Daniel Wilson, Federal Reserve Bank of San Francisco, FRBSF Economic Letter, 2012-35, November 26, 2012

From the abstract:
Federal highway grants to states appear to boost economic activity in the short and medium term. The short-term effects appear to be due largely to increases in aggregate demand. Medium-term effects apparently reflect the increased productive capacity brought by improved roads. Overall, each dollar of federal highway grants received by a state raises that state’s annual economic output by at least two dollars, a relatively large multiplier.

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