Working Papers

2023-02 | January 2023


Inflationary Effects of Fiscal Support to Households and Firms

Author(s): Galina Hale, John Leer, and Fernanda Nechio

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.

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Article Citation

Hale, Galina, John Leer, and Fernanda Nechio. 2023. "Inflationary Effects of Fiscal Support to Households and Firms," Federal Reserve Bank of San Francisco Working Paper 2023-02. Available at