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Fiscal Policy, Disinflation, and the Safety Net
The Issue: The upsurge in inflation across the world since 2021 has been the sharpest in more than three decades. While inflation affects all people in an economy, its effects can be particularly harmful to poorer households. The standard approach to reducing inflation, by causing a recession through monetary tightening, can also disproportionately harm the poor. A recent study by the International Monetary Fund suggests that fiscal policy can help monetary policy curb inflation, while at the same time supporting poor families from the cost-of-living effects of inflation as well as from the contractionary effects of ... (full story)