Fiscal Stimulus Caused Only 1% of the 8% Rise in U.S. Inflation

Laurence Seidman

Challenge, 2023, vol. 66, issue 5-6, 169-187

Abstract: Was the 8% rise in U.S. inflation in 2021–2022 mainly caused by 2021 fiscal stimulus? This article presents evidence that 5% of the 8% rise in U.S. and European inflation was caused by two cost pushes: severe supply chain disruptions from covid and a huge rise in the cost of oil. Two percent was caused by higher wage increases to try to keep up with the 5% cost-push. One percent in Europe was caused by a natural gas price spike. U.S. fiscal stimulus in 2021 was the same as in 2020. Only 1% of the U.S.’s 8% rise was caused by 2021 fiscal stimulus.

Date: 2023
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DOI: 10.1080/05775132.2023.2278348

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