Fiscal Policy and Crowding Out

Even timely, targeted, and temporary fiscal policy might not work as planned. With so many variables in an economy, a central bank’s monetary policy and savvy consumers can unintentionally help to offset it.
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[@sethwilliams3683]

Wow, what a great video! The illustrations are very helpful for the thought process! I will definitely look at this channel first for help in economics.

[@longnewton1]

A couple of points: Firstly Government spending could be inflationary, but only if we have full employment. Secondly, you implied that we do all act rationally (I guess you mean in the long run), but this is demonstrable wrong. For example, why do we buy unhealthy food?

[@Imtryingtodobetter]

This is the best way of learning economics, currently doing IB HL Econ course (predicted 7 in my last year, mainly thanks to you).

[@crazymonu7090]

Love this video It helped in understanding a topic of CA-INTERMEDIATE EXAMINATION

[@lykaxyz]

Thank you for making it easier to understand. Appreciate the speech rate.

[@macsnafu]

Actions have consequences, and they're not always the intended consequences.

[@Dividend.Dynamics]

Very interesting video on fiscal policy, and I like how it mentions that rational consumer behaviour and monetary policy can offset the effects of fiscal policy to a degree!

[@brycepark2664]

What is wrong with increased savings in the long term?

[@briant2897]

I LOVE these videos and use them both in my high school classes and college classes, but the idea that any single person chooses to not spend their tax cut for the specific reason of saving it for future increases is utterly ludicrous. Indeed, it isn't even "rational", as history shows us that they very rarely conduct contractionary fiscal policy. Somebody looked at some data and clearly came to an incorrect conclusion.

[@MultiChip94]

Great videos and explanation! I think that "crowding out" could be even better visualized by making use of the IS-LM model. I really appreciate your effort creating these videos! Thank you.

[@smallgoblin5500]

The way this video visualizes Real GDP at 2:00 is honestly astounding. Such a helpful representation of this concept, I wish more ideas were presented this way.

[@hyundata]

Good to understand. Love this video

[@Walkabout]

Can anyone tell me why does government borrowing lead to increased interest rates?

[@xosrovhuseynli2890]

Monetary offset; Ricardian equivalence

[@hazimrahim2188]

easy to understand. thank you

[@AloTecnologia]

Fantastic class

[@eliushkabahmanfar187]

Brilliant!!

[@jenniew2522]

I really like this video, thank you.

[@Strive.in.the.cause.of.Allah.]

Thanks sir😊

[@JohnHumphreys]

True enough... though realistically it's more important to explain the international crowding out that occurs through changes in net exports caused by changing demand for FX. Government deficits will be partly funded by a net increase in debt to foreigners. For those foreigners to lend money to your government, they first need to buy your local currency, which increases the demand for your local currency, and therefore puts upward pressure on the exchange rate (cet par). Where will that money come from? Unless there is a change in the broad money supply, that money must be diverted from other people who were either going to invest in your country (therefore reducing investment) or buy things from your country (therefore reducing net exports). Indeed, for a small open economy (which includes most countries), the international crowding out will be the dominant effect.

[@susomedin5770]

John Humphreys Makes nosense. Like the video...

[@shivyanshtiwari9593]

my teacher sucks

[@therealnoodles7638]

No such thing as crowding out. You mean to tell me that when the government "borrows" from me, my money becomes government bonds. And when the government "uses" this to do a project, it ends up in someones pockets. So the savings has increased. My saving turned from cash into bonds. The project guy got money too. No such thing as crowding out. Dismal science is really proving it is dismal.

[@mn412]

TheRealNoodles His point is that increased demand for loans (by government borrowing) raises real interest rates and thus discourages borrowing in the private sector which in turn can lead to less investment and less growth.

[@poojaverma5048]

great explanation

[@sumbomarcus]

Love this

[@jaymills1720]

That’s wild. Business scales back with higher rates ? Not… they raise prices with higher rates and only scale back if demand is weak. What a weak set of arguments.