Does Unconventional Monetary and Fiscal Policy Contribute to the COVID Inflation Surge?

Jing Cynthia Wu, Yinxi Xie () and Ji Zhang

No 33044, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We investigate whether unconventional monetary and fiscal policy enacted in response to the COVID-19 pandemic contributed to the 2021–2023 inflation surge. Through the lens of multiple complementary empirical strategies, including event studies, vector autoregressions, and regional panel regressions, we establish a null result across all approaches. Our findings challenge the popular view in the media that pandemic-era stimulus caused recent inflation. The key economic mechanism operates through a disinflationary supply-side channel in the Phillips curve, which offsets the upward pressure on inflation from the usual demand channel. We demonstrate this mechanism both theoretically and empirically.

JEL-codes: E31 E52 E63 (search for similar items in EconPapers)
Date: 2024-10
New Economics Papers: this item is included in nep-ban, nep-cba, nep-mac and nep-mon
Note: AP EFG ME
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.nber.org/papers/w33044.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:33044

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w33044
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().