Saturday, March 28, 2020

Will US helicopter money be effective? Yes, it probably will.

This week President Trump proposed sending Americans $1,000 checks. Such a direct stimulus is also known as ‘helicopter money.’ Not all Republicans were enthusiastic about this idea. For example, Senate Appropriations Committee Chairman Richard Shelby said “I don’t know the logic of that.” In this note we take a closer look at the economic logic behind helicopter money. Based on our analysis, we expect this to be effective in slowing down a sharp decline in consumer spending, although it will probably not be enough to bring the economy back on an upward growth path.


1 comment:

lastgreek said...

Personally, K, I'd go for the unlimited loan guarantees from the Fed, as promised to the corporate grifters, rather than a tiny (barely crumbs) one-off payment.

Full disclosure: That's my corporate grifter mindset talking ;)