Helicopter Money

Posted by admin on Saturday, January 2, 2016

A helicopter drop of money is a permanent/irreversible increase in the nominal stock of fiat base money with a zero nominal interest rate, which respects the intertemporal budget constraint of the consolidated Central Bank and fiscal authority/Treasury or the State. An example would be a temporary fiscal stimulus (say a one- off transfer payment to households, as in Friedman’s example), funded permanently through an increase in the stock of base money

Willem H. Buiter (2014). The Simple Analytics of Helicopter Money: Why It Works – Always. Economics: The Open-Access, Open-Assessment E-Journal, Vol. 8, 2014-28. http://dx.doi.org/10.5018/economics- ejournal.ja.2014-28 See Also: Ben Bernanke, Adair Turner. New York Times, July 29, 2016

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