Muellbauer, John, (2016), “Helicopter money and fiscal rules”, Voxeu, 10 June
The Eurozone faces a lost decade or worse under current fiscal policy and restrictions on monetary policy. The ECB now faces a fundamental contradiction in its mandate between the Lisbon Treaty’s Article 127 (price stability, plus the ECB target of under but close to 2% inflation) and Article 123 (no overt monetary finance of governments). This article discusses three options – two ways in which the fiscal rules could be improved; and the temporary abeyance of Article 123, making it ‘state-dependent’. It also explains why recent arguments against the effectiveness of ‘helicopter money’ are mistaken.
Relevant Posts
- Kay, John, (2016), “Helicopter Money: A Disguise For Debt Financing Funded By Short-Term Borrowing”, Social Europe, 2 June
- Minenna, Marcello, (2016), “Helicopter Money: An Old Novelty”, Social Europe, 17 Μay