The crowding out effect from the European debt crisis perspective: Eurozone experience

Baki Demirel, Cumhur Erdem and Ä°lhan EroÄŸlu

International Journal of Sustainable Economy, 2017, vol. 9, issue 1, 1-18

Abstract: The present study aims to measure the crowding out effect for the countries in the Eurozone that have tried to finance budget deficits through borrowing. We have examined the effects of government debt, government expenditure, interest rate and growth rate on private investments for the 2000-2015 period. The results show that government debt, government expenditure, interest rates and budget deficits all affect private investment negatively and the impact of economic growth is positive. The findings of the study support the existence of the crowding out effect in the Eurozone for the period of 2000-2015.

Keywords: European debt crisis; Eurozone; crowding out effect; financial crisis; budget deficits; borrowing; government debt; government expenditure; interest rates; growth rates; private investment. (search for similar items in EconPapers)
Date: 2017
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