As can be seen, such a rebound in investment would raise the equilibrium funds rate by 30 basis points, according to the FRB/US model. In addition, higher investment would improve the longer-run growth prospects of the U.S. economy, although the effects in this particular case are fairly small, with real GDP growth about 0.1 percentage point higher on account of the higher investment.
12  By emphasizing “longer-run equilibrium” interest rates, I am excluding monetary policy (which is unlikely to have major effects on the equilibrium real interest rate), and thereby also relating to concerns about monetary policy being the only game in town. -9Over the years, many economists--some of them textbook authors--have noted that expansionary fiscal policy could raise equilibrium interest rates.