Pandemic-era government stimulus measures such as JobKeeper dramatically overcompensated for lost income and, when combined with rock-bottom interest rates, pushed inflation 3 percentage points higher than it needed to be, new research shows.
The modelling by Australian National University visiting fellow Chris Murphy found pandemic-era fiscal stimulus provided $2 of compensation for every $1 of income the private sector lost because of COVID-19.
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Michael Read is the Financial Review's economics correspondent, reporting from the federal press gallery at Parliament House. He was previously an economist at the Reserve Bank of Australia and at UBS. Connect with Michael on Twitter. Email Michael at michael.read@afr.com
