A situation in which the government is borrowing heavily while businesses and...
the fact that borrowing money for public investment reduces the amount of money available for private investment
The possibility that an increase in one form of spending may cause another form to fall. This could happen in various ways. Suppose for example that government spending on public work rises. This might use scarce resources, such as skilled engineers, diverting them from alternative investment projects, which are thus delayed. Alternatively, if increased demand causes inflation, this might lead to tighter monetary policy, thus cutting forms of spending. Finally, if private investors are made nervous by increased government debt, a rise in public works might scare off private investment. Total crowding out occurs if other spending falls by 100 per cent of the rise in public works. Partial crowding out occurs if other spending falls, but by less than spending rises. It is possible that crowding in may occur, that is, other spending is actually increased, if conditions are such that the Keynesian multiplier works, or through favourable effects of an overall rise in spending on the confidence of private investors. The currency liability of Central government constitutes one-two-five rupee coins, small coins, and other commemorative coins issued by the government mints.
A drop in consumption or investment spending caused by government spending.
The tendency for an increase in government purchases of goods and services to increase interest rates, thereby reducing or crowding out investment expenditure.
The effect of an increase in government expenditures on investment.
The claim that an increase in government borrowing or expenditure leads to a reduction in private investment through higher interet rates.
The decline in private investment owing to an increase in government purchases.
The situation in which government borrowing forces interest rates up, squeezing the private sector (business and consumer) from the credit markets.
The tendency for federal government, by deficit financing to compete with firms or persons for borrowed funds; that is, firms and households unable to borrow at a low rate of interest curtail their investment and consumption spending.
In economics, crowding out theoretically occurs when the government expands its borrowing to finance increased expenditure, or cuts taxes (i.e. is engaged in deficit spending), crowding out private sector investment by way of higher interest rates. To the extent that there is controversy in modern Macroeconomics on the subject, it is because of disagreements about how financial markets would react to more government borrowing.