Infrastructure, private expectations and investment

Vol. 42 No. 3 (2022)

Jul-Sep / 2022
Published August 17, 2022
PDF-Portuguese (Português (Brasil))
PDF-Portuguese (Português (Brasil))

How to Cite

Fraga, Jefferson S., and Marco Flávio da Cunha Resende. 2022. “Infrastructure, Private Expectations and Investment”. Brazilian Journal of Political Economy 42 (3):678-96.

Infrastructure, private expectations and investment

Jefferson S. Fraga
Doutor em Economia, Universidade Federal de Minas Gerais. Belo Horizonte/MG, Brasil.
Marco Flávio da Cunha Resende
Professor do Departamento de Economia, Universidade Federal de Minas Gerais.
Brazilian Journal of Political Economy, Vol. 42 No. 3 (2022), Jul-Sep / 2022, Pages 678-696


Economic literature has highlighted that infrastructure investment shows
positive externalities which foster the economic growth. Based upon the Post-Keynesian
perspective, the aims of this article are twofold: i) to explain the interactions among
infrastructure, conventions, expectations and aggregate private investment, summarized
in what Keynes called technically social investment; ii) to show in theoretical terms that
discontinuities of infrastructure investments reduce the sensitivities of private aggregate
investment in relation to its determinants, with economic policy implications. In the Post-
Keynesian view, private investment is volatile and sensitive to changes in conventions and
expectations. We show that infrastructure spending stimulates private investments because it
reduces uncertainty and coordinates the emergence of private conventions and expectations
that foster private investments.

JEL Classification: H54; O40; E20.

Keywords: Infrastructure expectations private investment sensitivities