This article presents an analysis of the property channel, through which positive fiscal impulses can crowd out private expenditures. The analysis uses a modified IS-LM model proposed by William L. Silber (1970).

The issue of portfolio crowding out has never before been described thoroughly in the Polish economic literature. According to the author's best knowledge, it was discussed in more detail only in the work of Urszula Kosterna (1995). The analysis, however, was presented in a graphic form, whereas the article presents an algebraic solution, i.e. one with a higher degree of generality.

Furthermore, two modifications were introduced into the Silber's model.

• Firstly, a real interest rate was added to the set of variables describing consumption, and an income level was added to the investment determinants.
• Secondly, a simplifying assumption that the physical capital stock is stable was abolished.

Specifications of the consumption and investment functions presented in the article are closer to reality than those assumed by Silber. However, these do not have such a fundamental impact on the conclusions drawn from the model as the other modification. Dependence of the physical capital stock on the investment volume ensured equilibrium stability over medium term.

The main part of this article includes three chapters:

• the first one describes the assumptions of the model,
• in the second one the formulas for fiscal multipliers were derived,
• in the third one the multiplier sign was examined.

All conclusions drawn from the analysis have been gathered in the summary. This is where some intuitive explanations of the interdependencies formally presented in the main body of the article can be found.