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The Economics of Helicopter Money

Author

Listed:
  • Pierpaolo Benigno

    (University of Bern and EIEF)

  • Salvatore Nisticò

Abstract

An economy plagued by a slump and in a liquidity trap has some options to exit the crisis. We discuss “helicopter money†and other equivalent policies that can reflate the economy and boost consumption. In the framework analysed – where lump-sum transfers may be the only e↵ective fiscal response, like in the current pandemic crisis – the central bank, and only the central bank, is the rescuer of last resort of the economy. Fiscal policy is bounded by solvency constraints unless the central bank backs treasury’s debt.

Suggested Citation

  • Pierpaolo Benigno & Salvatore Nisticò, 2020. "The Economics of Helicopter Money," Working Papers CASMEF 2001, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    • Handle: RePEc:lui:casmef:2001
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    File URL: https://www.luiss.it/sites/default/files//2023-12/WP_2001.pdf
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    References listed on IDEAS

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    Cited by:

    1. Radwanski, Juliusz, 2020. "On the Purchasing Power of Money in an Exchange Economy," MPRA Paper 104244, University Library of Munich, Germany.
    2. Temperini, Jacopo & D'Ippoliti, Carlo & Gobbi, Lucio, 2024. "Is the time ripe for helicopter money? Growth impact and financial stability risks of outright monetary transfers," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 24-36.
    3. Donato Masciandaro, 2020. "Ecb Helicopter Money: Economic And Political Economy Arithmetics," BAFFI CAREFIN Working Papers 20138, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.

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    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

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