SHORT-TERM AND LONG-TERM MACROECONOMIC RETURNS TO HIGHER-EDUCATION

This study examines relationships between expenditures on higher education and economic production in the United States. Aggregate time-series models yield three main findings. First, the private economy appears to be better stimulated by governmental spending on higher education than by governmental spending in general. Second, higher education expenditures on organized research have favorable and long-lasting effects on private production. Third, higher education expenditures on nonresearch activities are stimulative over the short term, but are inversely related to private production over the long term. Several implications of these findings are discussed, including how post-1960 changes in the priorities of federal and state spending on higher education may be affecting the national economy.