Claudio Borio, Piti Disyatat, Anna Zabai,(2016), “Helicopter money: The illusion of a free lunch”, Voxeu, 24 May
As central banks have been testing the limits of unconventional monetary policies, many observers have started to consider more radical options. One that has been gaining ground is that of ‘helicopter money’ (Friedman 1969) or, more soberly described, ‘overt money finance’ of government deficits (Turner 2015). Proponents see it as a sure-fire way to boost nominal spending by harnessing central banks’ most primitive power: their unique ability to create non-interest bearing money at will and at negligible costs. But does this really represent an additional tool for monetary policy or is it simply a reformulation of what central banks have done so far, albeit with greater fanfare?
Relevant posts
- Papadia, Francesco, Wolff, Guntram B., (2016), “Central banks: from omnipotence to impotence?”, Bruegel Blog, 2 March.
- Claeys, Grégory, Wolff, Guntram B., (2015), “Have central banks lost their ability to control inflation?”, Bruegel Blog, 1 December