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Government Spending on Public Infrastructure, Prices, Production and International Trade
Journal article   Peer reviewed

Government Spending on Public Infrastructure, Prices, Production and International Trade

Sajid Anwar
Quarterly Review of Economics and Finance, Vol.41(1), pp.19-31
2001
url
https://doi.org/10.1016/S1062-9769(00)00059-4View
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Abstract

Banking, Finance and Investment provision of public infrastructure international trade monopolistic competition
This paper examines the impact of a change in government spending on public infrastructure when monopolistic competition prevails in one sector of the economy. The analysis is based on a variation of the Spence-Dixit-Stiglitz model where the presence of internal economies in the production of a differentiated intermediate good leads to specialization based external economies in the production of the final good. It is shown that changes in government spending on public infrastructure can influence relative prices, production, the degree of specialization, and pattern of international trade.

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