crowding out



  • noun a situation where there is little money for private companies to borrow, because the government’s borrowings are very heavy


  • The effect that an increase in one kind of spending can have in reducing another kind of spending. Most frequently mentioned is the effect of an increase in government spending on investment, which falls when an increase in the budget deficit drives up the interest rate.

Health Economics

  • (written as Crowding Out)
    In general, a reduction in private expenditure (especially investment) that occurs when a government's expansionary fiscal policy (which may be to the advantage of the health care sector) causes interest rates to rise. In health economics, the term has been used to describe the effect that public health insurance programmes may have on the demand for private health care insurance.