Balanced Budget Multiplier
The balanced budget multiplier is the output effect of equal changes in government purchases and lump-sum taxes in a simplified economic model.
Fiscal terms for multiplier effects, fiscal and balanced-budget multipliers, and the crowding out that can offset policy or investment impacts.
Multipliers and Crowding Out explains how an initial spending or tax change can affect total output and how private responses can reduce that effect.
Use these pages to distinguish a general spending multiplier from a fiscal-policy estimate, a balanced-budget result, and crowding out. The parent Fiscal Policy Multipliers and Stimulus section connects these measures to specific policy tools.
This landing page distinguishes the general Multiplier Effect from policy-specific fiscal and balanced-budget multipliers, then connects those estimates to Crowding Out. Choose the narrower page when the policy instrument, calculation, time horizon, or offsetting private response changes the analysis.
| Area | Use it for |
|---|---|
| Balanced Budget Multiplier | Textbook output effect of equal changes in government purchases and lump-sum taxes, plus the assumptions that make the result equal one. |
| Crowding Out | Private investment, consumption, credit, or net exports displaced through financing, taxation, resource, or exchange-rate channels. |
| Fiscal Multiplier | Output response associated with a specified government purchase, transfer, or tax change. |
| Multiplier Effect | General mechanism linking an autonomous spending change to total output after later spending rounds and leakages. Includes the textbook investment multiplier. |
Fiscal-policy material is educational and does not provide tax, legal, public-policy, or investment advice.
Choose a subsection first. Deeper term pages live inside each subsection, which keeps large topic hubs readable.
The balanced budget multiplier is the output effect of equal changes in government purchases and lump-sum taxes in a simplified economic model.
Crowding out occurs when public borrowing, taxation, or resource use displaces private investment, consumption, credit, or net exports.
A fiscal multiplier estimates the output change associated with a specified government spending, transfer, or tax change relative to a no-policy baseline.
The multiplier effect is the change in total economic output caused by an initial change in autonomous spending, after subsequent spending rounds and leakages.