A study by the management consulting company
McKinsey & Company recommended that the federal
government increase spending on infrastructure, such as
bridges and highways, by between $150 and $180 billion
per year. The study estimated that the result would be an
increase in GDP of between $270 billion and $320 billion
per year. What is the implied value of the multiplier if the
McKinsey study’s estimate of the effect of infrastructure
spending on GDP is correct?
Source: David Harrison, “Nation’s Crumbling Roads Put a Dent in
Drivers’ Wallets,” Wall Street Journal, July 31, 2015.