Report

Manufacturing Gains from Green Energy and Semiconductor Spending since the CHIPS and Inflation Reduction Acts

Abstract: Real investment—spending (net of inflation) on nonresidential construction, manufacturing equipment, and intellectual property products (IPP)—in the United States has grown substantially over the last few years despite the high-interest-rate environment that emerged in 2022 and is only now beginning to subside. The current strength of investment is important to policymakers because its sensitivity to interest rates makes it a key channel through which monetary policy is transmitted into the economy and because real private domestic investment constitutes 15 percent of US real GDP.

Keywords: CHIPS and Science Act; Inflation Reduction Act; green energy; semiconductors; manufacturing investment; fiscal incentives;

JEL Classification: E01; E22; E62; E65; Q58;

Bibliographic Information

Provider: Federal Reserve Bank of Boston

Part of Series: Current Policy Perspectives

Publication Date: 2024-11-19

Number: 2024-7