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The "Crowding Out" Effect of Federal Government Outlay Decisions: An Empirical Note

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  • Cebula, Richard
  • Carlos, Christopher
  • Koch, James

Abstract

This note has addressed the empirical issue of crowding out by examining the proportion of GDP devoted to private investment in new physical capital in part as a function of the proportion of GDP devoted to federal government outlays. Three alternative models were estimated, all of which revealed evidence of (a) a definite pattern in which private investment is crowded out by government spending and (b) only partial, i.e., incomplete, crowding out.

Suggested Citation

  • Cebula, Richard & Carlos, Christopher & Koch, James, 1980. "The "Crowding Out" Effect of Federal Government Outlay Decisions: An Empirical Note," MPRA Paper 51554, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:51554
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    References listed on IDEAS

    as
    1. Keith M. Carlson & Roger W. Spencer, 1975. "Crowding out and its critics," Review, Federal Reserve Bank of St. Louis, vol. 57(Dec), pages 2-17.
    2. Michael W. Keran, 1970. "Monetary and fiscal influences on economic activity : the foreign experience," Review, Federal Reserve Bank of St. Louis, vol. 52(Feb), pages 16-28.
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    Cited by:

    1. David Bowles & Holley Ulbrich & Myles Wallace, 1989. "Default Risk, Interest Differentials and Fiscal Policy: A New Look at Crowding Out," Eastern Economic Journal, Eastern Economic Association, vol. 15(3), pages 203-212, Jul-Sep.

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    More about this item

    Keywords

    budget deficit; crowding out; partial crowding out;
    All these keywords.

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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