FIGURE 4. Search frictions: Permanent increase in public investment with construction delays

Gov. investment increase 2-year time to build 5-year time to build Long-term effect

Horizontal axes: quarters; vertical axes: percent deviations from the steady state, except inflation, which is in annualised p.p. deviations from the steady state, and public debt to GDP, which is in p.p. deviations. All variables are in real terms.