As Alesina astutely summarized: “What keeps an economy from slumping when government spending, a major component of aggregate demand, goes down? . . . Th e answer: private investment. Our research found that privatesector capital accumulation rose aft er the spendingcut defi cit reductions, with fi rms investing more in productive activities— for example, buying machinery and opening new plants. . . . Aft er the taxhike defi cit reductions, capital accumulation dropped” (Alesina 2012). Furthermore, Alesina and Perotti (1995) claim that “the main theoretical reasons which suggest that fi scal adjustments may not be contradictory is the ‘crowding in’ argument: a reduction in the government borrowing requirement, by reducing interest rates, may ‘crowd in’ private investments” (1995, 21).

Clara E. Mattei, The Capital Order, loc. 1738