The so-called "helicopter money" is discussed as a direct alternative to monetary policy instruments like QE with which a Central Bank (CB) purchases government securities. This flooding [of] financial institutions with capital lowers interest rates and increases the money supply without printing new money. However, the effects of QE on the real economy were described as indirect and underwhelming.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Helicopter Money (HM)
- Alternative to Quantitative Easing (QE)
- The Three Approaches Towards HM
- Desired Effects of HM
- Getting out of the LT
- Challenges of HM
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper explores the concept of Helicopter Money (HM) as a potential solution to economic recession and addresses its feasibility and potential implications. It examines the three main approaches to implementing HM and analyzes its desired effects on inflation, economic growth, and the liquidity trap.
- The feasibility and potential of HM as an economic policy tool
- The various approaches to implementing HM
- The potential impact of HM on economic growth, inflation, and the liquidity trap
- The challenges and criticisms associated with HM
- The potential implications of HM for central bank balance sheets and institutional separation between monetary and fiscal policy
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: The paper introduces the concept of Helicopter Money (HM) as a monetary policy tool and discusses its potential as a solution to economic recession. It explains the liquidity trap (LT) and the rationale for using HM in such circumstances.
- Helicopter Money (HM): This section discusses HM as a direct alternative to Quantitative Easing (QE) and explores its potential advantages. It highlights the limitations of QE in stimulating the economy.
- The Three Approaches Towards HM: The paper presents three distinct approaches to implementing HM, each with its own set of characteristics and potential implications.
- Desired Effects of HM: This section outlines the anticipated effects of HM on the economy, including its potential to boost demand, increase inflation, and reduce real interest rates.
- Getting out of the LT: This section explores how HM can help an economy escape the liquidity trap by stimulating demand and incentivizing investment.
Schlüsselwörter (Keywords)
The primary keywords and focus topics of this text include: Helicopter Money, Quantitative Easing, Liquidity Trap, Monetary Policy, Fiscal Policy, Inflation, Deflation, Economic Growth, Central Bank, Government Debt, Seigniorage.
Frequently Asked Questions
What is Helicopter Money (HM)?
Helicopter Money is a monetary policy tool where a central bank provides money directly to the public or the government to stimulate the economy, often discussed as an alternative to Quantitative Easing (QE).
How does Helicopter Money differ from Quantitative Easing?
While QE involves purchasing government securities to lower interest rates, HM is a more direct injection of capital into the real economy, intended to have a more immediate impact on demand and inflation.
Can Helicopter Money help an economy escape a liquidity trap?
Yes, the paper explores how HM can stimulate demand and incentivize investment even when interest rates are near zero, providing a potential way out of a liquidity trap.
What are the desired effects of Helicopter Money?
The main goals include boosting economic growth, increasing inflation to target levels, and reducing real interest rates to encourage spending.
What are the main challenges of implementing Helicopter Money?
Challenges include potential risks to central bank independence, long-term inflationary threats, and the legal or institutional separation between monetary and fiscal policy.
- Citation du texte
- Julia Kaiser (Auteur), 2018, Helicopter Money. A way out of Recession?, Munich, GRIN Verlag, https://www.grin.com/document/1030659
