Inflation, fiscal policy and inequality
date: 14/11/2023
The paper (“Inflation, Fiscal Policy and Inequality”) uses EUROMOD and its Indirect Tax Tool extension to assess the impact of the 2022 price surge on Eurozone households and the cushioning effect of the fiscal policy measures adopted in response to it. The study covers the largest four euro area countries as well as Portugal and Greece. It finds that, on average, fiscal measures adopted in response to the inflationary shock compensated around a third of the household welfare loss in these countries (see chart).
This analysis was recently mentioned in a speech by ECB President Christine Lagarde.