Unless otherwise defined, crowding-out refers to the fact that the government absorbs supply on the financial market by offering better conditions – especially higher interest rates and, as a rule, better credit ratings – and thus crowds out private demand (crowding-out happens if the government is borrowing heavily while businesses and individuals also would like to borrow. The government can always pay a higher interest rate, but the private sector cannot, and is thus crowded out). – See permanent issuance, fiscal drag, fiscal ratio, debt ratio, public.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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