Quantifying the Inflationary Impact of Fiscal Stimulus under Supply Constraints

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Quantifying the Inflationary Impact of Fiscal Stimulus under Supply Constraints

Number 1050
February 2023

JEL classification: E23, E31, E32

Authors: Julian di Giovanni, Şebnem Kalemli-Özcan, Alvaro Silva, and Muhammed A. Yıldırım

This paper builds on Baqaee and Farhi (2022) and di Giovanni et al. (2022) to quantify the contribution of fiscal policy to U.S. inflation over the December 2019-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.

Available only in PDF

Author Disclosure Statement(s)

Julian di Giovanni
The author declares that he has no relevant or material financial interests that relate to the research described in this paper.

Şebnem Kalemli-Özcan
The author declares that she has no relevant or material financial interests that relate to the research described in this paper.

Alvaro Silva
The author declares that he has no relevant or material financial interests that relate to the research described in this paper.

Muhammed A. Yıldırım
The author declares that he has no relevant or material financial interests that relate to the research described in this paper.

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