Find out how contractionary fiscal policy can theoretically lead to a crowding-in effect in the credit market by encouraging private investment. Skip to content News ...

This description of crowding-out and crowding-in, and why crowding-in is likely to dominate in recessions, is from Baumol and Blinder’s principles text, Macroeconomics: Principles and Policy.

Fiscal policy is the way governments take in revenue through taxes and spends it on different public services. Browse Investopedia’s expert-written library to learn more.