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 assess whether unconventional monetary and fiscal policy implemented in response to the COVID-19 pandemic contribute to the 2021-2023 inflation surge through the lens of several different empirical methodologies—event studies, vector autoregressions, and regional panel regressions using granular data—and establish a null result. The key economic mechanism works through a disinflationary channel in the Phillips curve while monetary and fiscal stimuli put positive pressure on inflation through the usual demand channel. We illustrate this negative supply-side channel 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
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