Report
Has there been a crowding-out effect due to the increase in public debt?
The public debt ratio has risen considerably over the past 20 years (we look at the United States, the euro zone, France, the United Kingdom and Japan). One could therefore fear a crowding-out effect that has reduced productive capital, since, at equilibrium: Savings stock = Capital stock + Public debt Can we see this crowding-out effect? On what type of capital? If the crowding-out effect has been avoided, it may be thanks to: A rise in the savings rate; External borrowing (the use of savings from the rest of the world). We believe that to find out whether there is a crowding-out effect we should look not at real interest rates, but directly at growth in capital, both productive and housing. We then see that there has been a crowding-out effect on both types of capital everywhere (United States, euro zone, France, United Kingdom, Japan). Actually, the crowding-out effect has not been avoided anywhere.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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