4min chapter

Many Happy Returns cover image

Gilt Yields and Ghosts of Budgets Past: Who's Afraid of Bond Vigilantes?

Many Happy Returns

CHAPTER

Government Spending Dynamics

This chapter examines the intricate relationship between government spending and its influence on the private sector, focusing on the concepts of 'crowding out' and 'crowding in.' It discusses how government expenditures can either hinder or stimulate private investment, depending on the economic cycle, and emphasizes the importance of understanding the output gap in shaping these outcomes.

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