California could 'export inflation' to the rest of the US when it sends up to $10 billion in relief payments this October, a Harvard economist says

One Harvard economist says that California's governor is taking matters into his own hands to help people deal with inflation, which could hurt other states.

Depending on one's income and number of dependents, as many as 23 million Californians who make less than $250,000 a year will receive aStimulus check starting October 7th. The program is expected to give out a lot of money.

Many people argue that the plan is counter productive and will make inflation worse.

The Harvard economics professor and advisor to former President Barack Obama said that the state's residents could benefit from the extra money in their pockets.

Some of the inflation relief payments will show up in California as well. Californians will come out in front.

Californians' spending will not be limited to their borders. The money will cause prices to go up for Americans who don't have government checks.

At least 16 states have taken measures to give spenders some relief, and California's program is the most extensive. If these payments can have a positive impact on a state's residents, it should be no surprise that so many states have adopted them. If the Federal Reserve raises interest rates, it will cause the economy to stop growing, which will lead to job losses.

Other states may "export inflation" right back to California

California may have a net positive effect on its residents, but it isn't immune to the effects of other states' programs.

$36 million has been allocated for one-time payments of $450 per child in Florida. Residents in Colorado will be getting a $750 tax break next year. Different approaches have been taken by other states.

If some of this money causes prices in California to go up, the state will have to pay for it. Good news for some businesses and bad news for consumers.

"Californians are going to be behind from any 'inflation relief payments' made by Florida and other states."

It's possible that states acting in their own interests will make things worse.

Collective irrationality is added to by an unfortunate individual state to all of this.

There isn't a consensus among economists about how theStimulus payments affect the economy.

The dollar amount of states' relief programs may seem large, but they are not the only factor keeping inflation high. The war in Ukraine continues and Americans are still spending down savings. Inflation remains an issue for the US even without these programs.

In Florida, state relief payments have been designed to help families in need. The targeted nature of the program may or may not offset inflationary pressures.

The US doesn't bear the full impact when California exports inflation to other countries. Europe is dealing with significant inflation problems of its own and some of this money goes abroad to boost prices.

The strong US dollar makes overseas spending attractive to many consumers. More affordable goods for Americans can come from cheaper imports.

The strong dollar makes European products more affordable for US consumers, but it also makes imports from the US more expensive. The inflation problem can be made more difficult by both factors.