Literature Review

Abstract

This chapter notes opinions have varied for decades on whether crowd out effects offset the positive effects of stimulus programs. It examines a wide variety of opinions expressed in major newspapers, professional journals, in and other papers. It divides findings in professional literature into the different types of models that produced them: Keynesian, vector autoregression (VAR) and dynamic stochastic general equilibrium (DSGE). The chapter notes there has been remarkably little empirical work done on how crowd out affects stimulus programs, despite its key importance in macroeconomics, and widespread interest in the topic.