Modelling the impact of the American Rescue Plan in NiGEM

Key points

• The incoming US President has announced a $1.9 trillion fiscal stimulus to the economy that amounts to around 9 per cent of GDP.
• Using our NiGEM model we estimate that this stimulus could add around 3 percentage points to US GDP growth and, including spillover effects from trade, just under 1 percentage point to global GDP growth in its first year.
• Higher inflation will also result, with a key factor likely to be how the fiscal transfers affect the spending of income-constrained households.