The False Promise of Helicopter Money
The debate over helicopter money has focused solely on whether the policy would work, without considering the need for prudence. The credibility and independence of monetary authorities are prerequisites for their effectiveness – and thus must be protected from the transfer of fiscal risk.
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LONDON – One of the most prominent questions concerning the global economy today is whether monetary policy is approaching the limit of its effectiveness. Inflation remains well below target in the eurozone and Japan, despite aggressive quantitative easing (QE) and negative policy interest rates, and both the euro and yen have appreciated against the US dollar since the start of the year.