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

Author

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  • Baki Demirel
  • Cumhur Erdem
  • Ä°lhan EroÄŸlu

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.

Suggested Citation

  • Baki Demirel & Cumhur Erdem & Ä°lhan EroÄŸlu, 2017. "The crowding out effect from the European debt crisis perspective: Eurozone experience," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 9(1), pages 1-18.
    • Handle: RePEc:ids:ijsuse:v:9:y:2017:i:1:p:1-18
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    Cited by:

    1. Enock Mwakalila, 2020. "Crowding Out of Private Sector in Tanzania: Government Expenditure, Domestic Borrowing, and Lending Rates," Emerging Economy Studies, International Management Institute, vol. 6(1), pages 123-135, May.

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