Crowding-out and Crowding-in Effects of Government Bonds Market on Private Sector Investment (Japanese Case Study)
This paper reviews the relationship between public sector investment and private sector investment through government expenditures financed by government bonds in the Japanese economy. This study hypothesizes that deficit financing by bond issues does not crowd out private sector investment, and this finance method may crowd in. Thus the government increases bond issues and sells them in the domestic and international financial markets. This method does not affect interest rates because they are insensitive to government expenditures and they depend on interest rates levels in the international financial market more than in the domestic financial market because of globalization and integration among financial markets.
|Date of creation:||Oct 2006|
|Date of revision:|
|Publication status:||Published in IDE Discussion Paper. No. 74. 2006.10|
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88-10, Federal Reserve Bank of Chicago.
- Claessens, Stijn & Klingebiel, Daniela & Schmukler, Sergio, 2003.
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Policy Research Working Paper Series
2986, The World Bank.
- Claessens, Stijn & Klingebiel, Daniela & Schmukler, Sergio, 2003. "Government Bonds in Domestic and Foreign Currency: The Role of Macroeconomic and Institutional Factors," CEPR Discussion Papers 3789, C.E.P.R. Discussion Papers.
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