Replication Folder for "Did the American Rescue Plan Cause Inflation?: A Synthetic Control Approach" by Dong Gyun Ko

As of November 2021, the U.S. goverment dedicated 26.46 percent of the GDP to soften the effects of the coronavirus pandemic. This translates to stimulus packages worth 5.54 trillion U.S. dollars

Economic impact of the Coronavirus pandemic

The impact of the COVID-19 pandemic was felt throughout the whole world. Lockdowns forced many industries to close completely for many months and restrictions were put on almost all economic activity. In 2020, the worldwide GDP loss due to Covid was 6.7 percent. The global unemployment rate rocketed to 6.47 percent in 2020 and confidence in governments’ ability to deal with the crisis diminished significantly.

Governmental response

In order to stimulate the economies and bring them out of recession, many countries have decided to release so called stimulus packages. These are fiscal and monetary policies used to support the recovery process. Through application of lower taxes and interest rates, direct financial aid, or facilitated access to funding, the governments aim to boost the employment, investment, and demand.

Stimulus packages

Until November 2021, Japan has dedicated the largest share of the GDP to stimulus packages among the G20 countries, with 53.69 percent (308 trillion Yen or 2.71 trillion U.S. dollars). While the first help package aimed at maintaining employment and securing businesses, the second and third ones focused more on structural changes and positive developments in the country in the post-pandemic future.

Healthcare premiums under the Affordable Care Act (ACA) have fallen for all consumers nationally in 2023 when compared with the previous two years. This is due to a system of tax credits provided by the American Rescue Plan and the Inflation Reduction Act passed by the United States Congress. After these tax credits, the average person with ACA coverage pays an average monthly premium of 129 U.S. dollars, down from 164 U.S. dollars in 2021. A report from the U.S. Centers for Medicare & Medicaid Services estimates that due to the tax credits, consumers nationally on average save over 800 U.S. dollars per year in premiums. The ACA created a federally run healthcare exchange which is used by 33 states as of 2023. States can also decide to run their own exchange - due to politics or practicality - of which there are 17 plus the District of Columbia.