A survey of the crowding out problem in deficit finance : an honors thesis (HONRS 499)

It has been argued that the deficit activity of the United States Federal Government -- spending in excess of its revenues -- hinders the private sector because it "crowds out" potential borrowers in the private sector. The objectives of this paper are to examine that hypothesis and survey some of the literature focusing on the crowding out problem. Background information on government deficits and debt is included, along with supporting U.S. macroeconomic data from 1940 through 1994. Other theorized downfalls of government deficits in addition to crowding out are presented, and a collection of empirical papers, which attempt to either build or refute a link between deficits and higher interest rates, is surveyed. Finally, two articles, which look at the crowding out problem from very unique perspectives, are presented.Honors CollegeThesis (B.?.