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Chicago Fed Letter, No. 02, October 1987
Is the Public Capital Stock Too Low?

An extensive and well maintained system of roads, bridges, highways, lighthouses, and canals is necessary to meet the needs of a vital, growing economy. The duty of constructing such public works falls on the government because their benefits accrue not just to particular individuals but to the economy at large, or because the cost reductions derived from economies of scale are best captured by direct, centralized, public capital outlays.

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