Discussion paper

DP17828 Quantifying the Inflationary Impact of Fiscal Stimulus Under Supply Constraints

Julian Di Giovanni Sebnem Kalemli-Ozcan Alvaro Silva Muhammed Yildirim

21 Jan 2023

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

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Citation

Di Giovanni, J, S Kalemli-Ozcan, A Silva and M Yildirim (2023), ‘DP17828 Quantifying the Inflationary Impact of Fiscal Stimulus Under Supply Constraints‘, CEPR Discussion Paper No. 17828. CEPR Press, Paris & London. https://cepr.org/publications/dp17828