Quantifying the Inflationary Impact of Fiscal Stimulus Under Supply Constraints
Working Paper 30892
DOI 10.3386/w30892
Issue Date
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.