Monday
January 27
2025

Research: Do Cash Transfers Cause Inflation?

Whether cash transfers or fiscal stimulus cause inflation is a longstanding debate in economics. From a macroeconomic perspective, the key determinant of the output-inflation trade-off is whether the increased demand created by cash-induced spending can be met by increased supply. When supply can more easily be increased (what economists call more elastic aggregate supply, see Figure 1), inflation will be lower.

Photo courtesy of Scott Mainwaring.

Source: VoxDev (link opens in a new window)

Categories
Finance, Technology
Tags
cash transfers, research, rural development, scale