Infrastructure Investment and Inflation in Saudi Arabia
Abstract
The possibility that the resulting supply-side effects of public sector investment in infrastructure can reduce inflationary pressures has long intrigued economists. Tersely put, increases in investment in infrastructure, while perhaps inflationary in the initial construction stage, may ultimately result in reductions in the price level through the elimination of bottlenecks and the subsequent increase in the supply of goods and services. In particular, investment in such areas as transportation and energy, thereby reducing the costs of commercial production, appear to have the potential of being particularly effective in this regard. It follows that if a stable relationship between increases in infrastructure and reductions in the cost of production exist, the public sector in many developing countries would have a powerful tool at its disposal to achieve high growth with only limited inflationary pressures.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jan 01, 1990
- Accession Number
- ADA528056
Entities
People
- Robert E. Looney
Organizations
- Naval Postgraduate School