The possibility that an increase in one form of spending may cause another form to fall. This could happen in various ways: Suppose for example that government spending on public works rises. This might use scarce resources, such as skilled engineers, diverting them from alternative investment projects which are thus delayed. Alternatively, if increased demand causes inflation, this might lead to tighter monetary policy, thus cutting other forms of spending. Finally, if private investors are made nervous by increased government debt, a rise in public works might scare off private investment. Total crowding out occurs if other spending falls by 100 per cent of the rise in public works. Partial crowding out occurs if other spending falls, but by less than public spending rises. It is possible that crowding in may occur, that is, other spending is actually increased, if conditions are such that the Keynesian multiplier works, or through favourable effects of an overall rise in spending on the confidence of private investors.

• export surplus
• ex post
• exposure to risk
• external balance
• external diseconomy
• external economy
• externality
• external labour market
• extrapolate
• extrapolative expectations
• factor cost
• factor endowment
• factor incomes
• factor incomes from abroad
• factoring
• factor-intensity
• factor market
• factor of production
• factor price equalization
• factor prices
• factor productivity
• factor proportions, variable
• factors of production
• facts, stylized
• failure