Helicopter Money: What Is It and What Does It Do?

Ricardo Reis and Silvana Tenreyro

Annual Review of Economics, 2022, vol. 14, issue 1, 313-335

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: helicopter money; fiscal–monetary interactions; central bank balance sheet (search for similar items in EconPapers)
JEL-codes: E32 E52 E63 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (7)

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Working Paper: 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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DOI: 10.1146/annurev-economics-051420-020618

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