Quantifying the Inflationary Impact of Fiscal Stimulus under Supply Constraints
AbstractThis paper builds on Baqaee and Farhi (2022) and di Giovanni et al. (2022) to quantify the contribution of fiscal policy on US inflation over the December 2019 to June 2022 period. Model calibrations show that aggregate demand shocks explain roughly two-thirds of total model-based inflation and that the fiscal stimulus contributed half or more of the total aggregate demand effect.
Citationdi Giovanni, Julian, Şebnem Kalemli-Özcan, Alvaro Silva, and Muhammed A. Yıldırım. 2023. "Quantifying the Inflationary Impact of Fiscal Stimulus under Supply Constraints." AEA Papers and Proceedings, 113: 76-80. DOI: 10.1257/pandp.20231028
- E21 Macroeconomics: Consumption; Saving; Wealth
- E23 Macroeconomics: Production
- E31 Price Level; Inflation; Deflation
- E62 Fiscal Policy