Crowding out
Crowding out is when government borrowing soaks up available financial capital and leaves less for private investment in physical capital.
Definition
According to Principles of Economics by Timothy Taylor (3rd edition),
- Crowding out. When government borrowing soaks up available financial capital and leaves less for private investment in physical capital.
According to Macroeconomics by Mankiw (7th edition),
- Crowding out. The reduction in investment that results when expansionary fiscal policy raises the interest rate.