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

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

No 2022-019, Working Papers from Federal Reserve Bank of St. Louis

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; inflation; supply chains (search for similar items in EconPapers)
JEL-codes: E2 E6 F4 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2022-09-02
Note: Publisher DOI: https://doi.org/10.20955/r.105.21-50
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Citations: View citations in EconPapers (3)

Published in Federal Reserve Bank of St. Louis Review

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Related works:
Journal Article: Demand-Supply Imbalance during the COVID-19 Pandemic: The Role of Fiscal Policy (2023)
Working Paper: Demand-Supply imbalance during the Covid-19 pandemic: The role of fiscal policy (2022)
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DOI: 10.20955/wp.2022.019

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