The article explores how government spending on physical and human capital affects economic growth and welfare. The researchers found that the optimal levels of public expenditure for growth and welfare are not affected by how infrastructures are defined. However, the way the economy adjusts to changes in fiscal policy differs between stock and flow specifications. For example, after a tax cut, physical and human capital growth rates move towards a new equilibrium in opposite directions under the stock specification, but in the same direction under the flow specification.