We empirically assess whether a usually expected negative response of private consumption and private investment to a … there is a fiscal consolidation; iii) there is a crowding-in effect for private investment, from fiscal contractions …

The author of this brief offers evidence that policies aimed at stimulating private sector investment through interest … saving or lowering the budget deficit, a higher level of business investment is not one of them. Rather, because of the … sizable effects of the business cycle and financial channels on investment, such a program will weaken the economy in the …