Report | Health

Investment and U.S. Fiscal Policy in the 1990s

Briefing Paper #42

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Investment is key to policy analysis for at least two reasons. First, it is the
source of capital accumulation and is therefore a major determinant of the economy’s
long-run output capacity as well as the productivity and income of the labor force.
Second, as a large and volatile component of aggregate demand, fluctuations of in-
vestment have a major influence on the short-run path of the business cycle.

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