Fiscal stimulus in response to the COVID shock filled a 'hole' in aggregate income, which prevented hysteresis (permanent loss of productive capacity). Overfilling the hole slightly (creating 1-2% extra inflation per year) was worth the cost of preventing permanent supply-side damage.

causalpending

Speaker

Mark Da

Evidence Quote

fiscal policy is designed to fill that hole

Source

The Crisis In Monetary Policy: It Doesn't Matter That Much | Mark DowForward Guidance
Created: 8/11/2026, 1:22:08 AM

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