The Economics of Helicopter Money
Pierpaolo Benigno and
No 8/20, Working Papers from Sapienza University of Rome, DISS
An economy plagued by a slump and in a liquidity trap has some options to exit the crisis. We discuss "helicopter money" and other equivalent policies that can reflate the economy and boost consumption. In the framework analysed - where lump-sum transfers may be the only effective fiscal response, like in the current pandemic crisis - the central bank, and only the central bank, is the rescuer of last resort of the economy. Fiscal policy is bounded by solvency constraints unless the central bank backs treasury's debt.
Keywords: Helicopter money; ZLB; Pandemic Crisis (search for similar items in EconPapers)
JEL-codes: E50 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Working Paper: The Economics of Helicopter Money (2022)
Working Paper: The Economics of Helicopter Money (2020)
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