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Demand-Supply imbalance during the Covid-19 pandemic: The role of fiscal policy

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

No 1353, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

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 contributed to 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 led to high inflation. Our findings suggest a sizable role for fiscal policy in affecting price stability.

Keywords: Covid; Fiscal policy; Inflation; Supply chains (search for similar items in EconPapers)
JEL-codes: E20 E60 F40 (search for similar items in EconPapers)
Date: 2022-08-04
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https://www.federalreserve.gov/econres/ifdp/files/ifdp1353.pdf (application/pdf)

Related works:
Journal Article: Demand-Supply Imbalance during the COVID-19 Pandemic: The Role of Fiscal Policy (2023) Downloads
Working Paper: Demand-Supply imbalance during the COVID-19 pandemic: The role of fiscal policy (2022) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgif:1353

DOI: 10.17016/IFDP.2022.1353

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