60 structural models of U.S. consumption, investment and the GDP were tested. Virtually all tests indicate that as deficits grow, private borrowing and spending decline. The cause appears to be a "crowd out": government borrowing undertaken to finance the deficit reduces money available for private parties to borrow and spend. Crowd out was found to dominate the stimulus effect, resulting in a net negative effect on the economy. Crowd out was found in both recessions and nonrecession periods. Results are inconsistent with hypotheses proposed by Krugman that general economic conditions are responsible for the negative relationship, not crowd out.
John J. Heim. "Does 'Crowd Out' Offset The Stimulus Effect Of Government Deficits? A Large Scale Econometric Study." Proceedings of the New York State Economics Association. vol. 6, October 2013, p. 64-73
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