Helicopter money: what is it and what does it do?

Ricardo Reis and Silvana Tenreyro

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We review the different meanings of helicopter money, both in the literature and in the public debate around it, and we clarify the conditions under which helicopter money can have an impact on real activity. To do so, we set out a simple model that encapsulates a number of potential channels of policy transmission. The model provides a taxonomy of possibilities for helicopter money to affect the economy, as well as a benchmark set of conditions under which helicopter money is neutral. We use the model to analyze and discuss the impact that helicopter drops might have in response to a number of economic shocks, including a financial crisis, a fiscal crisis, and a pandemic.

Keywords: central bank balance sheet; fiscal monetary interactions; helicopter money (search for similar items in EconPapers)
JEL-codes: E32 E52 E63 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2022-08-12
New Economics Papers: this item is included in nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published in Annual Review of Economics, 12, August, 2022, 14(1), pp. 313 - 335. ISSN: 1941-1383

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http://eprints.lse.ac.uk/114593/ Open access version. (application/pdf)

Related works:
Journal Article: Helicopter Money: What Is It and What Does It Do? (2022)
Working Paper: Helicopter money: what is it and what does it do? (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:114593

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