Helicopter Money: Survey Evidence on Expectation Formation and Consumption Behavior
50 Pages Posted: 6 Jan 2017 Last revised: 14 Sep 2019
Date Written: December 17, 2016
The effects of helicopter money on expectations and economic outcomes are empirically largely unexplored. We fielded a representative survey among the German population, randomly assigning respondents to various unconventional monetary policy scenarios that raise household income. We find that in all policy treatments people spend almost 40% of the transfer, which is a non-trivial share that could increase aggregate demand. Policies do not raise inflation expectations. Differences in how transfers are implemented appear to be mostly irrelevant because of idiosyncratic behaviour by households that largely does not take into account general equilibrium effects and governments' future policies.
Keywords: helicopter money, unconventional monetary policy, quantitative easing, inflation expectations, consumer behaviour, Ricardian equivalence, mental accounting
JEL Classification: E21, E52, E58, E63
Suggested Citation: Suggested Citation