Fiscal Policy

This chapter highlights the important role played by the governmentConsumptiongovernment in jump starting and sustaining economic growth. The government provides the country’s infrastructureInfrastructure or public capitalPublic capital—laws, roads, education, public health, and utilities—that secure property rights and raise the productivity of private capital. Growth in public capitalPublic capital keeps the marginal return to private capital from falling dramatically during industrialization, helping to explain G1.