The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Crowding Out

  • Olivier Jean Blanchard
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_647

Abstract

‘Crowding out’ refers to all the things which can go wrong when debt-financed fiscal policy is used to affect output. While the initial focus was on the slope of the LM curve, ‘crowding out’ now refers to a multiplicity of channels through which expansionary fiscal policy may in the end have little, no or even negative effects on output.

Keywords

Accumulation of capital Aggregate demand Budget deficits Crowding out Fiscal consolidation Fiscal expansion Fiscal policy Flexible exchange rates Full employment Inflation Interest rates Intertemporal taxation Investment tax credit IS–LM model Labour supply Lump sum taxes Multiplier analysis Mundell–Fleming model Natural rate of unemployment Private spending Public debt Public expenditure Ricardian equivalence theorem Risk premium Taxation of income 

JEL Classifications

E2 
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Bibliography

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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Olivier Jean Blanchard
    • 1
  1. 1.