Adam P. Balcerzak

PhD

Department of Economics

Faculty of Economic Sciences and Management

Nicolaus Copernicus University in Toruń

Crowding Out and Crowding in within Keynesian Framework. Do We Need Any New Empirical Research Concerning Them?

Toruń, Poland

E-mail: apb@umk.pl

Elżbieta Rogalska

MS

Department of Microeconomics

Faculty of Economic Sciences

University of Warmia and Mazyry in Olsztyn

Olsztyn, Poland

E-mail: e.rogalska@interia.pl

ABSTRACT. Last global financial crisis resulted in common among developed countries implementation of expansionary fiscal policy as an anti-recession tool. This led to the renewal of academic discussion on stabilization effectiveness of fiscal policy. In this context, the main research goal of this paper is to give theoretical analysis of the determinants of counter-cyclical effectiveness of fiscal policy with special concentration on crowding out and crowding in effects. Methodologically the analysis is done within Keynesian IS-LM framework within the assumption of expectations of economic actors. The theoretical analysis is confronted with the review of empirical papers based on the experiences of developed countries.

Received: March, 2014

1st Revision: April, 2014

Accepted: May, 2014

DOI:10.14254/2071-789X.2014/7-2/7

JEL Classification: E62, H31, H32

Keywords: fiscal policy, crowding out, crowding in, stabilization policy.