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Date: | Fri Mar 31 17:19:10 2006 |
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----------------- HES POSTING -----------------
The concept of crowding out was a major part of the "Treasury View"
in Interwar British economic policy debates. A good place for an
overview of this literature (both journal literature and government
documents), with references, is in Peter Clarke's _Keynesian
Revolution in the Making_ (1988). Another good source on the debate
in Britain on crowding out is in Roger Middleton's _Towards the
Managed Economy: Keynes, the Treasury and the Fiscal Policy Debate
of the 1930's_.
One interesting part of the crowding out debates in Britain in this period
is that during the process of the debates the Treasury added a twist to
their argument; instead of simply arguing that government borrowing
would lead to higher interest rates and, hence, to lower private
investment, they introduced expectations as an additional source of
crowding out. They argued that large scale government borrowing was
likely to create uncertainty in the minds of private investors and cause
them to pull back on their own investment plans. Both Middleton and
Clarke discuss this phenomenon.
Bradley W. Bateman, Fellow
National Humanities Center
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