A Positive Analysis on Crowding-out Effects of Fiscal Deficits

The paper first tests the effects of fiscal deficits on the private consummation by introducing fiscal revenue and spending to the private consume function, then analyzes the effects of fiscal deficits on the private investment from three aspects: economic cycle, the fund source of total investment in fixed asset and the returns of capital. Our analysis shows that fiscal deficits arising from active fiscal policy initiated by Chinese government in 1998 has not resulted in crowding-out effect.