Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/296338 
Year of Publication: 
2023
Citation: 
[Journal:] Quantitative Economics [ISSN:] 1759-7331 [Volume:] 14 [Issue:] 3 [Year:] 2023 [Pages:] 817-853
Publisher: 
The Econometric Society, New Haven, CT
Abstract: 
We show that the effectiveness of redistribution policy is tied to how much inflation it generates, and thereby to monetary-fiscal adjustments that ultimately finance the transfers. In the monetary regime, taxes increase to finance transfers while in the fiscal regime, inflation rises, imposing inflation taxes on public debt holders. We show analytically that the fiscal regime generates larger and more persistent inflation than the monetary regime. In a two-sector model, we quantify the effects of the CARES Act in a COVID recession. We find that transfer multipliers are larger, and that moreover, redistribution is Pareto improving, under the fiscal regime.
Subjects: 
Household heterogeneity
redistribution
monetary-fiscal policy mix
transfer multiplier
welfare evaluation
COVID-19
CARES Act
JEL: 
E53
E62
E63
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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