This study investigates whether federal government budget deficits in the U.S. over the 1990-99 time period acted to crowd out private investment in new plant and equipment. Using quarterly data, empirical estimations clearly indicate that private investment was in fact negatively impacted by...

This note has addressed the empirical issue of crowding out by examining the proportion of GDP devoted to private investment in new physical capital in part as a function of the proportion of GDP devoted to federal government outlays. Three alternative models were estimated, all of which...