Soaring Inflation Mostly Caused by Stimulus-Fueled Demand: Study

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The pandemic-era inflationary wave that has swelled into a persistent cost-of-living crisis for many Americans was driven mostly by a stimulus-fueled demand surge, although supply-side bottlenecks made the problem worse, a team of economists said in a recent study.

Julian di Giovanni, an economist at the Federal Reserve Bank of New York and co-author of the study (pdf), summarized the team’s findings in an Aug. 24 blog post that comes amid an ongoing debate as to what caused inflation to soar to multi-decade highs.