The Role of Infrastructure in U.S. Growth

Infrastructure capital, the structures and equipment that comprise "the basic systems that bridge distance and bring productive inputs together" (Cisneros 2010), is a vital input into the productive capacity of any economy. It is often claimed that the US fails to invest sufficiently in its own infrastructure. Is this true? We introduce new data and a theoretical framework to address this and related questions. Our data consist of new measures of the price and quantity of transportation, communication, and energy infrastructure in the United States over the1929-2011 period. We show that the real price of infrastructure capital has been rising steadily over time; and, the replacement cost of the infrastructure capital stock has not kept pace with GDP for the past 60 years. Using the neoclassical growth model, we estimate the impact of additional infrastructure investment on private sector productivity and assess the effectiveness of infrastructure spending as a tool of fiscal stimulus.