Alberto Martin, Enrique Moral-Benito, Tom Schmitz, 11 September 2018

Housing bubbles may crowd out credit from other sectors, but they may also have a crowding-in effect by providing collateral to real estate-owning firms or generating attractive assets which banks can securitise and use to increase their credit supply. This column applies data from the Spanish housing bubble to a simple model of a closed economy to show that both effects were present. At first, the crowding-out effect dominated, but then crowding in occurred. This model can be applied to similar positive shocks in other sectors.

Samuel Bowles, 26 May 2016

Explicit economic incentives – for example, a subsidy to contribute to a public good – can sometimes ‘crowd out’ generous and ethical motives. But when properly designed, can incentives ‘crowd in’ these civic virtues? This column uses an example from ancient Athens to show how this might be done, providing a lesson for modern mechanism design and public policy. 


CEPR Policy Research