Demand-Supply Imbalance during the COVID-19 Pandemic: The Role of Fiscal Policy

François de Soyres, Ana Maria Santacreu and Henry L. Young

Review, 2023, vol. 105, issue 1, 50 pages

Abstract: To mitigate the health and economic fallout from the COVID-19 pandemic, governments worldwide engaged in massive fiscal support programs. We show that generous fiscal support is associated with an increase in the demand for consumption goods during the pandemic, but industrial production did not adjust quickly enough to meet the sharp increase in demand. This imbalance between supply and demand across countries contributed to high inflation. Our findings suggest a sizable role for fiscal policy in affecting price stability, above and beyond what a monetary authority can do.

Keywords: COVID-19; fiscal policy; demand-supply imbalance (search for similar items in EconPapers)
JEL-codes: E2 E6 F4 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Demand-Supply imbalance during the Covid-19 pandemic: The role of fiscal policy (2022)
Working Paper: Demand-Supply imbalance during the COVID-19 pandemic: The role of fiscal policy (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlrv:95433

DOI: 10.20955/r.105.21-50

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