Will a Burst in Federal Infrastructure Spending Accelerate the Recovery from the COVID-19 Recession?

Facing a highly uncertain and potentially sluggish recovery in a presidential election year, the president has pressed for increased infrastructure spending to boost the economy. If he continues to promote this idea, members of Congress may go along with this policy as a potential way to speed up the recovery. Because the current transportation funding bill is due to expire in September, there will be a window of opportunity to act.A limited number of research papers have carefully examined the impact of government investment spending on highways and other infrastructure since the Great Recession. Published papers have examined the effectiveness of the spending programs embodied in the American Recovery and Reinvestment Act of 2009 (ARRA). I show in this policy brief that the preponderance of evidence suggests that this type of spending does not significantly boost the economy in the short term. In particular, the most likely impact is a spending multiplier that is less than one. This implies that government investment spending reduces, or crowds out, some private spending