Pandemic Recession and Helicopter Money: Venice, 1629-1631

53 Pages Posted: 10 May 2022

See all articles by Charles Goodhart

Charles Goodhart

London School of Economics & Political Science (LSE) - Financial Markets Group

Donato Masciandaro

Bocconi University - Department of Economics; Bocconi University - Department of Economics (ECO)

Stefano Ugolini

University of Toulouse 1 - Laboratoire d'Etudes et de Recherches sur l'Économie, les Politiques et les Systèmes Sociaux (LEREPS)

Date Written: May 9, 2022

Abstract

This paper analyses the monetary policy of the Most Serene Republic of Venice in the years of calamities using a modern equivalent of helicopter money, namely an extraordinary issue of (base) money, coupled with capital losses for the issuer. We treat the 1629 famine and the 1630-1631 plague as a unique negative macroeconomic shock, which the government addressed using fiscal monetization, with diverse effects on its citizens. Consolidating the balance sheets of the Treasury and of the State Bank of Issue, we show that the Republic implemented what was, in effect, helicopter money, with such policies most likely driven by political reasons, to limit public disturbances and riots.

Keywords: monetary policy, helicopter money, pandemic, Venice 1629-1631

JEL Classification: N1, N2, E5, E6, D7

Suggested Citation

Goodhart, Charles A.E. and Masciandaro, Donato and Ugolini, Stefano, Pandemic Recession and Helicopter Money: Venice, 1629-1631 (May 9, 2022). BAFFI CAREFIN Centre Research Paper No. 179, 2022, Available at SSRN: https://ssrn.com/abstract=4104193 or http://dx.doi.org/10.2139/ssrn.4104193

Charles A.E. Goodhart

London School of Economics & Political Science (LSE) - Financial Markets Group ( email )

Houghton Street
London WC2A 2AE
United Kingdom
0207 955 7555 (Phone)
0207 242 1006 (Fax)

Donato Masciandaro (Contact Author)

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

Bocconi University - Department of Economics (ECO) ( email )

Via Gobbi 5
Milan, 20136
Italy

Stefano Ugolini

University of Toulouse 1 - Laboratoire d'Etudes et de Recherches sur l'Économie, les Politiques et les Systèmes Sociaux (LEREPS) ( email )

21, Allée de Brienne
Toulouse, 31042
France

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