Principles of Macroeconomics / Unit 15 MAC 1408 short lesson, about 20 seconds
When Crowding Out Is Suspended
Captions available
The idea
The chain depends on borrowing raising the interest rate. When rates are already at or near zero and lenders are abundant, extra government borrowing need not raise them, and investment need not fall.
In practice
After the Great Recession, deficits grew while investment held up and rates stayed near zero.
Where people slip
The anchor's own verdict is that crowding out appeared to be suspended then.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Builds on
Something wrong in this lesson? Flag it · Sources for Principles of Macroeconomics