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Printing Away the Mortgages: Fiscal Inflation and the Post-Covid Boom / William F. Diamond, Tim Landvoigt, Germán Sánchez Sánchez.
- Format:
- Book
- Author/Creator:
- Diamond, William F.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w32573.
- NBER working paper series no. w32573
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2024.
- Summary:
- We analyze the impact of fiscal and monetary stimulus in an economy with mortgage debt, where inflation redistributes from savers to borrowers. We show theoretically that fiscal transfers without future tax increases cause a surge in inflation, increasing consumption demand and house prices. The power of fiscal stimulus grows when borrowers are more indebted. We then show quantitatively that transfers followed by easy monetary policy cause a surge in inflation which helps explain features of the post-Covid boom, including a boom in output and house prices. This boom comes with a longer-term contraction, since redistribution reduces borrower labor supply.
- Notes:
- June 2024.
- Print version record
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