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

Ricardo Reis and Silvana Tenreyro

No 17180, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We review the different meanings of helicopter money both in the literature and in the public debate around it, and 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 it is neutral. We use the model to analyse 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: 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: 2022-04
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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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