Tag Archives: Inflation targeting

Helicopter money: setting the tale straight

Author: Fergus Cumming.

When Friedman famously conjured up images of banknotes fluttering from helicopters in 1969, perhaps he knew he was about to inspire decades of sky-bound puns and policies in the name of deflation avoidance.  Helicopter money goes beyond standard fiscal and monetary policy by boosting economic activity using money created by the central bank – money that does not have to be paid back.  To its modern advocates, the tale is one of blue-sky thinking that could avert the next recession.  But is this just pie in the sky?  This post discusses why such a policy is different to quantitative easing, why it is unlikely to have much impact relative to conventional fiscal measures and the pitfalls associated with pursuing it.
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Filed under Macroeconomics, Monetary Policy