Economic Effects of Public Investment

This book explores the indirect economic effects of public investments, emphasizing the importance of measuring these impacts for informed decision-making. Economic Effects of Public Investment provides essential insights.

In Economic Effects of Public Investment, the author begins by defining key economic categories, including 'generation-basis' and 'incidence-basis' effects, alongside direct and indirect economic impacts. The book emphasizes the importance of measuring incidence-basis indirect effects when making decisions regarding public investments. This foundational argument is rooted in the contrasting views of H. Mohring and J. Tinbergen, whose theories on indirect economic effects challenge one another. The author illustrates how these differing perspectives—termed 'transfer' and 'existing theory'—play a critical role in understanding the economic implications of public projects like highways.

The book further argues that effective measurement of these economic effects necessitates the use of general and dynamic spatial modeling simulation approaches. By focusing on this methodology, the author reinforces the idea that Tinbergen's insights are particularly relevant in real-world scenarios where Marshallian external economies are present. This approach not only enhances the understanding of economic effects but also informs better decision-making processes in public investment.

Additionally, Economic Effects of Public Investment systematically addresses monetary (pecuniary) external economies, highlighting their significance in determining the criteria for public investments. The author stresses the importance of examining the process toward equilibrium rather than merely the equilibrium itself, providing a nuanced perspective on how public investments can lead to optimal economic outcomes. This comprehensive analysis offers valuable insights for policymakers and economists alike.