For the most part, the earlier analyses tended to focus on the short-run to medium-run
stimulative effects of the fiscal stimulus and did not pay as much attention to its potential
longer-run effects. They assumed that fiscal policy in all countries was viewed as being
sustainable in the long run, in the sense that the public expected the temporary budgetary
deficits eventually to be offset and not to lead to sharply higher or ever-increasing ratios of
public debt to GDP. As a result, the analyses typically did not show the fiscal actions leading
to increases in global long-term real interest rates and/or increases in risk premia in specific
countries, which would result in the crowding out of private investment. Although the earlier
studies did sometimes mention as a caveat the risk that the temporary fiscal stimulus might
be allowed to become permanent and lead to crowding out of private expenditures and a loss
of credibility on the part of the fiscal authorities, this was not central to the analysis.