The Macroeconomic and Budgetary Effects of Federal Investment

The federal government buys many goods and services that are expected to increase private-sector productivity—that is, the ability of the private-sector workforce, using the stock of capital, to produce goods and services. Such purchases by the federal government are called investment. In an earlier report, the Congressional Budget Office examined various aspects of federal investment itself, such as its composition and the way it had changed over time. Building on that analysis, this report explains how CBO, when analyzing proposals that would change the amount of federal investment, determines their effects on the economy and on the federal budget.