Some inflation scenarios for the American Rescue Plan Act of 2021

Francesco Bianchi, Jonas Fisher and Leonardo Melosi

Chicago Fed Letter, 2021, issue 453, 8

Abstract: The American Rescue Plan Act (ARP) signed into law on March 11, 2021, authorized approximately $1.9 trillion in federal government spending. ARP is widely expected to boost economic growth over the next two to three years—and significantly so early on. The upswing in growth is likely to increase resource pressures and therefore consumer price inflation as well. The potential for this channel to raise inflation substantially has attracted the attention of economic commentators, including Olivier Blanchard and Lawrence Summers. But the magnitudes and persistence of the possible increases in inflation are often left unsaid. In this article, we take a closer look into the effects ARP may have on inflation.

JEL-codes: E00 E31 E52 E62 (search for similar items in EconPapers)
Date: 2021
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