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The empirical results of this study suggested that infrastructure including all sub-indices decreases trade deficit i. Beside, infrastructure the undermentioned control variables have significant impact on trade deficit in long run but insignificant in short run. Furthermore, the Padroni, and Kao cointegration test suggested that there is strong cointegration between the dependent and independent variables in all of the columns. The findings recommended that quality and availability of infrastructure aggregate and sub-indices matters to enhance trade and decrease trade deficit in selected South Asian countries.

Hence, efficient infrastructure i. The present study highlighted that availability of infrastructure accelerates regional and intra-regional trade however, we also find that the infrastructure decrease trade deficit in South Asian economies.

The data of Afghanistan and Maldives are unavailable, so we exclude these two countries from the analysis. Now V i original index and V min is the minimum value attained by country in original index.

PMG estimator also deals with heterogeneity problem. The detail is found in econometric methodology Sect. For consistent results, large time cross section T and number of cross section N is crucial to resolve the problem of heterogeneity.

Similarly, the resulting residual of error correction model be serially uncorrelated and the explanatory variables be treated as exogenous.

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He called for means testing and adding work requirements to benefit programs, as well as reducing qualifying income thresholds. Manchin also indicated that he would not be moved to support a bigger reconciliation bill if House progressives vote down the infrastructure bill this week.

He said he believes it will pass eventually, if not this week. This capital stock is simply the roads, buildings, bridges, ports, utilities, airports, and other structures and equipment that are financed by public funds and whose ultimate owners are governments. There are a number of compelling rationales for such a strong public role in infrastructure provision. Many of the capital projects undertaken for infrastructure investment would result in a natural monopoly.

For example, once the enormous upfront effort of building a new highway is made, the marginal cost of allowing an extra car on it is trivial. This provides an entry barrier to any profit-seeking economic agent thinking about building a competing highway. Given the resulting monopoly, a strong public role in either the provision or regulation of the sector is necessary to promote economic efficiency. Further, many of the spillover benefits of infrastructure investments are hard to precisely allocate to individual economic agents.

For example, the construction of a dam provides benefits to farmers, homeowners who are protected from floods, fishermen who can use the reservoirs, and so on. This makes charging precise fees based on the use of infrastructure difficult, and it argues that the public benefits of infrastructure should simply be paid for with public funds. Finally, some infrastructure investment provides services that society has decided should be available to all as basic rights safe drinking water, for example even if some customers are not profitable to serve for a strictly private entity.

The federal role is strongest in new capital spending, as opposed to operation and maintenance. Nearly 40 percent of all state and local capital spending on transportation and water infrastructure is financed by grants from the federal government. In short, governments at all levels, but particularly the federal government, are big players every year in infrastructure investment.

Overall spending on infrastructure as a share of gross domestic product GDP has been in long-term decline. The first lower line shows public investment in water and transportation.

The second higher line includes public investments in the construction of educational and hospital structures as well as investments in conservation, development, utilities, ports, and airfields. Think of these as narrow and broad measures of infrastructure.

Each saw sharp reductions in the s, and the rebound since then has still left them far below the levels that prevailed on average before Notes: The broad infrastructure series includes public investment in hospital and educational structures, highways, sewers, transportation facilities, and conservation and development. Moreover, there is strong evidence that because the prices of infrastructure investments are rising more rapidly than overall prices, a greater share of nominal spending must be undertaken just to keep the quality of infrastructure intact.

Figure B shows two measures of transportation and water infrastructure, taken from a recent report by the Congressional Budget Office CBO. One deflates the transportation spending by the overall deflator for gross domestic product, while the other deflates it by an infrastructure-specific deflator. The latter measure—which more accurately reflects the services provided by a given nominal amount of infrastructure spending—grows much more slowly in recent periods.

Note: Infrastructure-specific deflator uses prices of materials and other inputs used to build, operate, and maintain transportation and water infrastructure. Given the large role the federal government plays in providing resources for infrastructure investment, and given that this investment effort has fallen in recent decades, recent calls to boost the rate of infrastructure investment would seem to have prima facie merit. The rest of this paper highlights the near-term and long-term potential benefits from an increased federal infrastructure investment effort.

Since the Great Recession began, increased infrastructure investment has been suggested as a primary tool to restore the economy to full health. Infrastructure was not part of the first stimulus package meant to fight the Great Recession, the Economic Stimulus Act of , despite some calls for it to be included Mishel, Eisenbrey, and Irons Given that unemployment in was still significantly higher 4. Infrastructure projects started in , , or even in could have helped the economic recovery.

Even as of March , many measures of economic slack indicate that the economy could benefit from a boost in aggregate demand. The share of prime-age age 25—54 adults who were employed, for example, was 1. This may not sound like a lot, but this translates into roughly 1. Despite unemployment in March essentially matching its average, nominal wage growth for production and supervisory workers for the year ending in March was 2.

In this wage growth was 4. This sluggish wage growth has in turn made it hard for the Federal Reserve to maintain price inflation at their 2 percent target. So far, the lessons of these analyses have not been heeded.

For example, fiscal policy has not been more expansionary during the recovery from the Great Recession relative to past recoveries. A renewed push to increase infrastructure investment could move fiscal policy from being a drag on growth to being a boost to growth in coming years. Perhaps relevant to upcoming fiscal policy debates, infrastructure investment is routinely estimated to be a much more efficient fiscal stimulus than almost any form of tax cut, and it is significantly more efficient than those tax cuts whose benefits fall mostly on high-income households.

Table 1 provides a range of comparisons of various types of fiscal policy interventions. Many of these are taken from the research literature that existed before ARRA. Since then, most research on fiscal stimulus undertaken when monetary policy is accommodating has found even higher multipliers most famously, perhaps, in Blanchard and Leigh But the relative ranking of various fiscal policy interventions has largely been confirmed.

To give a quick sense of the employment consequences of infrastructure investment in the near-term, note that an output multiplier of 1. This increase in GDP would in turn boost employment by a bit over 1 million workers see Bivens for the relationships between output and employment.

The primary virtue of infrastructure investment as fiscal stimulus is that it is spent. Tax cuts and even direct transfer payments can be saved by households.

Because transfer payments tend to be directed toward low-income and hence cash-constrained households, they tend to not be saved and hence rival infrastructure investment as stimulus. But infrastructure investment is guaranteed, always and everywhere, to be spent.

Since , research on the causal effect of infrastructure spending on short-run output and employment has been bolstered by the examination of large, exogenous fiscal events: the large fiscal boost provided by ARRA in the United States, the large but quite variable fiscal contraction undertaken by countries in the European Union EU , and anti-corruption efforts in Italy. Acconcia, Corsetti, and Simonelli examine the fiscal shock that occurs in Italian provinces when public construction projects are halted in response to findings of Mafia involvement.

A law issued to combat public corruption provides for forceful and sudden halts to construction activity when local police find evidence of Mafia involvement. This provides an exogenous shock to fiscal spending that can be linked to subsequent changes in economic output. Such exogeneity is needed in studies of fiscal stimulus because of the ever-present possibility of two-way causality: fiscal changes can affect economic growth, but economic growth can also in theory affect fiscal changes.

Using this high-quality instrument that isolates exogenous fiscal changes i. Blanchard and Leigh examine the large but varied fiscal adjustments undertaken by EU members in response to the Euro crisis of — The House is out of Washington next week, and it could take the CBO days or weeks to prepare a score of the legislation.

The bills together make up the core of Biden's domestic agenda. Democrats see the plans as complementary pieces designed to boost the economy, jolt the job market, provide a layer of insurance to working families and curb climate change.

Biden and Democrats have looked for a signature achievement they can point to on the midterm campaign trail as the president's approval ratings flag. Biden will welcome Friday's developments, as House passage of the bill followed a strong October jobs report and approval of Pfizer's Covid vaccine for 5-toyear-olds in the U. While Biden could sign the infrastructure bill soon, the safety net and climate package will likely take weeks longer. The House will have to wait for a CBO score.

The Senate may pass a different version of the plan, which would require another House vote. Before the vote, Transportation Secretary Pete Buttigieg told MSNBC that "the moment the president signs this, then it's over to our department on the transportation pieces to get out there and deliver. Republicans helped to write the bill in the Senate, and it garnered 19 GOP votes in the chamber.