Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/297415 
Year of Publication: 
2023
Series/Report no.: 
Bank of Canada Staff Working Paper No. 2023-30
Publisher: 
Bank of Canada, Ottawa
Abstract: 
This paper studies the impact government expenditure has on inflation by examining an augmented Phillips curve implied from a structural New Keynesian model, Our estimation results, based on external instruments, show that the augmented Phillips curve has a flatter slope than the canonical specification and that government expenditure has a negative coefficient, Changes in government expenditure account for a substantial portion of inflation variations and provide new insights into the "missing disinflation" puzzle, We also find that inflation and inflation expectations respond negatively to fiscal spending shocks, reaffirming the supply-side channel through which inflation responds to fiscal expansions.
Subjects: 
Inflation and prices
Fiscal policy
Central bank research
JEL: 
E3
E62
E63
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.