Crisis Mitigation through Cash Assistance to Increase Local Consumption Levels—A Case Study of a Bimonetary System in Barcelona, Spain

Susana Martín Belmonte, Jordi Puig, Mercè Roca and Marta Segura
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Susana Martín Belmonte: Collaborator with Dimmons Research Group at Internet Interdisciplinary Institute (IN3), Universitat Oberta de Catalunya, Av. Carl Friedrich Gauss, 5, 08860 Barcelona, Spain
Jordi Puig: ESCI-UPF Research in International Studies and Economics (RISE), Passeig Pujades, 1, 08003 Barcelona, Spain
Mercè Roca: ESCI-UPF Research in International Studies and Economics (RISE), Passeig Pujades, 1, 08003 Barcelona, Spain
Marta Segura: ESCI-UPF Research in International Studies and Economics (RISE), Passeig Pujades, 1, 08003 Barcelona, Spain

JRFM, 2021, vol. 14, issue 9, 1-17

Abstract: Subsidies in the form of direct transfers from the government to citizens constitute a powerful mechanism for crisis mitigation and for the alleviation of economic inequalities. However, the connection between direct transfers of cash assistance to selected individual beneficiaries and the prosperity of their immediate surrounding local economy has not been sufficiently explored. This paper presents a case study which analyzes the effects of allocating cash assistance in the form of a local currency. It shows that, under certain conditions, such a transfer not only provides the beneficiaries with additional purchasing power to satisfy their needs but also that the monetary injection benefits local SMEs by generating additional turnover. Using transactional data from the system, some indicators are proposed to analyze the properties of the system, namely, user satisfaction, total and average income generated by local businesses, the local multiplier, the recirculation of the local currency, and the velocity of its circulation. Our findings indicate that cash assistance provided in the REC local currency could contribute to local economic development and financial stability by sustaining local commerce, while preserving most of the original positive effects of cash assistance in a legal tender.

Keywords: direct transfers; cash assistance; basic income; local economic development; complementary currencies; local currencies; economic multiplier; financial stability; local retail; local consumption (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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