Inflationary Effects of Fiscal Support to Households and Firms

Galina Hale, John Leer and Fernanda Nechio

No 2023-02, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: Fiscal support measures in response to the COVID-19 pandemic varied in their targeted beneficiaries. Relying on variability across 10 large economies, we study differences in the inflationary effects of fiscal support measures targeting consumers or businesses. Because conventional measures of real activity were distorted, we control for the underlying state of real economy using households sentiment data. We find that fiscal support measures to consumers, but not firms, had inflationary effects that manifested 5 weeks following the announcement and peaked at 12 weeks. The magnitude of the effect was larger in an environment of improving consumer sentiment.

Keywords: covid19; fiscal policies; inflation; consumers (search for similar items in EconPapers)
JEL-codes: E31 E62 E65 (search for similar items in EconPapers)
Pages: 43
Date: 2022-12-20
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Related works:
Working Paper: Inflationary effects of fiscal support to households and firms (2023)
Working Paper: Inflationary Effects of Fiscal Support to Households and Firms (2023)
Working Paper: Inflationary Effects of Fiscal Support to Households and Firms (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedfwp:95486

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DOI: 10.24148/wp2023-02

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