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Support Policies and Inflationary Pressures: A Critical Review of 2020-2022 in the Light of the 2008 Experience

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  • GEORGAKAS, IOANNIS

Abstract

We examine the relationship between expansionary monetary and fiscal policy and inflation in two different periods: the 2008 global financial crisis and the COVID-19 pandemic period from 2020 to 2022. In the first case, we analyze the response of central banks through interest rate cuts and quantitative easing in an environment of negative inflation and low demand. In the second, the much more intense monetary and fiscal intervention is examined, accompanied by direct transfers to households and firms, leading to widespread inflationary pressures from 2021 onwards. We attempt to compare the features and effects of the two policies, highlighting the effects of excessive liquidity, deficit financing, and delayed tightening. We conclude that treating inflation as a "transitory phenomenon" was a critical miscalculation. The need for macroeconomic stability, timely interest rate adjustment, and restoration of monetary credibility is stressed

Suggested Citation

  • Georgakas, Ioannis, 2025. "Support Policies and Inflationary Pressures: A Critical Review of 2020-2022 in the Light of the 2008 Experience," MPRA Paper 124405, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:124405
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    More about this item

    Keywords

    monetary policy; inflation; Federal Reserve; European Central Bank; interest rates; quantitative easing; 2008 crisis; COVID-19 pandemic; monetary policy; inflation;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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