⁸In our model (and most others in the literature we are contributing to) consumers do not adjust their labor supply in response to stimulus policies. This assumption is broadly consistent with the empirical findings in Ganong, Greig, Noel, Sullivan, and Vavra (2022) and Chodorow-Reich and Karabarbounis (2016). However, the literature is conflicted on this subject; Hagedorn, Manovskii, and Mitman (2017) and Hagedorn, Karahan, Manovskii, and Mitman (2019) argue that extensions of unemployment insurance affect both search decisions and vacancy creation leading to a rise in unemployment. Kekre (2022), on the other hand, evaluates the effect of extending unemployment insurance in the period from 2008 to 2014, and finds that this extension raised aggregate demand and implied a lower unemployment rate than without the policy. Finally, Cohen and Ganong (2024) conduct a meta-analysis of the literature on how unemployment benefits impact unemployment duration, and they find that the effects are modest.