EconPapers    
Economics at your fingertips  
 

COVID-19 HELICOPTER MONEY, MONETARY POLICY AND CENTRAL BANK INDEPENDENCE: ECONOMICS AND POLITICS

Donato Masciandaro ()

No 20137, BAFFI CAREFIN Working Papers from BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy

Abstract: This article discusses a form of fiscal monetization that produces losses in the central bank’s balance sheet, without a permanent increase in the money base. If an independent central bank acts as a long-sighted policymaker, an optimal helicopter monetary policy can be identified. At the same time, if the government in charge is made up of career-concerned politicians and citizens are heterogenous, then the policy mix will produce distributional effects, and conflicts between politicians and central bankers will be likely. Political pressures will arise and the helicopter money option will be less likely. The framework is applied in a discussion of the economics and politics of issuing COVID-19 perpetual bonds with the European Central Bank as the buyer.

Keywords: helicopter money; monetary policy; fiscal policy; political economy; central bank independence; modern monetary theory; populism; European Central Bank (search for similar items in EconPapers)
JEL-codes: D72 D78 E31 E52 E58 E62 (search for similar items in EconPapers)
Pages: 28
Date: 2020
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
ftp://ftp.unibocconi.it/pub/RePEc/baf/papers/cbafwp20137.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:baf:cbafwp:cbafwp20137

Access Statistics for this paper

More papers in BAFFI CAREFIN Working Papers from BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy Via Röntgen, 1 - 20136 Milano - Italy. Contact information at EDIRC.
Bibliographic data for series maintained by Michela Pozzi ().

 
Page updated 2021-01-14
Handle: RePEc:baf:cbafwp:cbafwp20137