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Dollar for Dollar Crowding Out in the Textbook Keynesian Cross Model When the Economy is Below Full Employment

Authors: Sheldon H. Stein;

Dollar for Dollar Crowding Out in the Textbook Keynesian Cross Model When the Economy is Below Full Employment

Abstract

In this paper, it will be demonstrated that a "dollar for dollar" crowding out of national investment caused by increased government spending is not just something that occurs within classical macroeconomic models. The reason for this is that in a closed economy Keynesian cross model with ignores money, national savings, or Y - C - G, is equal to national investment, or I. Such an "equilibrium" does not provide the national savings needed to finance a purely fiscal increase in government spending in a closed economy. Any additional government spending would have to occur at the expense of an already low level of capital spending and thus make the government spending multiplier equal to zero.

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
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