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The impact of fiscal deficits on the economy is complicated and requires careful analysis. For this reason, we see no simple correlation between fiscal deficits and inflation
whether this [fiscal deficit] activity is inflationary depends on how much potential output is available in the economy. If the economy is experiencing sluggish growth or a recession, then an increase in fiscal spending by the government will simply get the economy growing again.
when it comes to fiscal policy, this time was different. Typically, when money is distributed to people it results in an increase in spending. But during the pandemic, we saw a massive increase in the personal savings rate when the government sent out checks (see Exhibit 9).
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