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Is Helicopter Money a Solution During COVID-19?

Year 2023, Volume: 22 Issue: 46, 528 - 545, 25.06.2023
https://doi.org/10.46928/iticusbe.1101833

Abstract

Purpose: With the spread of the COVID-19 epidemic in the world, a series of restrictions and closures were carried out in countries. These restrictions and shutdowns are likely to trigger a recession in economies. Despite what may be the worst economic crisis since 1930, policymakers have introduced a series of financial packages. Therefore, it brought direct money transfers to households in the fight against the economic crisis. In this direction, explaining the term helicopter money is to explain this policy, seen as an alternative way out during the epidemic process, and to investigate whether there will be a solution proposal.
Scope: So far, policymakers have implemented a series of combat packages in the ongoing economic downturns. However, it has emerged that more than conventional policies are needed in unpredictable situations such as epidemics. Therefore, different approaches have been discussed and implemented in unexpected crises.
Method: First, the epidemic%E2%80%99s effects on the economy, the policy recommendations, and the literature were examined, and the emphasis notes were reviewed.
Conclusion: Helicopter money is considered more substantial than other fiscal expansions in the inflation target in deflationary countries. However, helicopter money risks creating hyperinflation in countries with high inflation. In addition, the implementation falls within the domain of financial authorities and jeopardizes the autonomy of central banks. In many economies, it is seen that fiscal policies are preferred more than monetary policies in combating the adverse effects of the epidemic process.
Originality: Comprehensive policies have been implemented in the economies during the COVID-19 outbreak. In this context, helicopter money has been evaluated to reduce economic damage during the epidemic process effectively. Examples of helicopter money include tax reductions, financing of public deficits, and money transfers to the private sector.

References

  • Addison, T., Sen, K., & Tarp, F. (2020). COVID-19: Macroeconomic dimensions in the developing world: WIDER Working Paper.
  • Albert, J. F., & Tercero-Lucas, D. (2020). Monetary Policy in Times of Pandemic: Evaluation and Proposal of the Helicopter Money. Revista de economía mundial, 56(56), 35-55. doi:10.33776/rem.v0i56.4723
  • Baldwin, R., & Tomiura, E. (2020). Thinking ahead about the trade impact of COVID-19. In R. Baldwin, & di Mauro B. W. (Ed.), Economics in the Time of COVID-19 (ss. 59-72). London: CEPR Press.
  • Barua, S. (2020). Understanding Coronanomics: The economic implications of the coronavirus (COVID-19) pandemic. SSRN Electronic Journal, 1-44. doi: https://doi.org/10.2139/ ssrn.3566477.
  • Beckworth, D. (2020). COVID-19 Pandemic, Direct Cash Transfers, and the Federal Reserve. Mercatus Center Research Paper Series, Special Edition Policy Brief (2020).
  • Belke, A. (2018). Helicopter money: should central banks rain money from the sky? Intereconomics, 53(1), 34-40.
  • Bofinger, P., Dullien, S., Felbermayr, G., Fuest, C., Hüther, M., Südekum, J., & di Mauro, B. W. (2020). Economic implications of the COVID-19 crisis for Germany and economic policy measures. In R. Baldwin, & di Mauro B. W. (Ed.), Mitigating the COVID Economic Crisis: Act Fast and Do Whatever (ss. 167-178). London: CEPR Press.
  • Borio, C. (2020). The Covid-19 economic crisis: dangerously unique. Business Economics, 55(4), 181-190. doi:10.1057/s11369-020-00184-2
  • Boumans, D., Link, S., & Sauer, S. (2020). COVID-19: The world economy needs a lifeline-but which one? EconPol Policy Brief 27.
  • Brodeur, A., Gray, D., Islam, A., & Bhuiyan, S. (2021). A literature review of the economics of COVID-19. Journal of Economic Surveys, 35(4), 1007-1044. doi:10.1111/joes.12423
  • Buiter, W. H. (2014). The Simple Analytics of Helicopter Money: Why It Works - Always. Economics: the Open-Access, Open-Assessment E-Journal, 8(28), 1-38.
  • Couppey-Soubeyran, J. (2020). Helicopter money to combat economic depression in the wake of the Covid-19 crisis. Veblen Institut for Economic Reforms, 2, 1-13.
  • Di Giorgio, G., & Traficante, G. (2018). Fiscal shocks and helicopter money in open economy. Economic Modelling, 74, 77-87. doi:https://doi.org/10.1016/j.econmod.2018.05.005
  • Dorn, F., Fuest, C., Göttert, M., Krolage, C., Lautenbacher, S., Lehmann, R., . . . Reif, M. (2020). The economic costs of the coronavirus shutdown for selected european countries: A scenario calculation. EconPol Policy Brief 25.
  • Fernandes, N. (2020). Economic effects of coronavirus outbreak (COVID-19) on the world economy. Available at SSRN 3557504.
  • Friedman, M. (1969). The optimum quantity of money, and other essays. Chicago: Aldine.
  • Galí, J. (2020a). The effects of a money-financed fiscal stimulus. Journal of Monetary Economics, 115, 1-19. doi:https://doi.org/10.1016/j.jmoneco.2019.08.002
  • Galí, J. (2020b). Helicopter money: The time is now. In R. Baldwin, & di Mauro B. W. (Ed.), Mitigating the COVID Economic Crisis: Act Fast and Do Whatever (ss. 57-61). London: CEPR Press.
  • Gourinchas, P.-O. (2020). Flattening the pandemic and recession curves. In R. Baldwin, & di Mauro B. W. (Ed.), Mitigating the COVID Economic Crisis: Act Fast and Do Whatever (ss. 31-40). London: CEPR Press.
  • IMF. (2021). World Economic Outlook: Recovery during a Pandemic—Health Concerns, Supply Disruptions, Price Pressures. Washington, DC: International Monetary Fund.
  • Loayza, N., & Pennings, S. M. (2020). Macroeconomic policy in the time of COVID-19: A primer for developing countries. World Bank Research and Policy Briefs 147291, 1-9.
  • Ludvigson, S. C., Ma, S., & Ng, S. (2020). Covid19 and the Macroeconomic Efects of Costly Disasters. Cambridge: Working Paper 26987, National Bureau of Economic Research.
  • Masciandaro, D. (2020). The Helicopter Money Puzzle: Economic and Political Economy Arithmetic. In BAFFI CAREFIN Centre Research Paper.
  • McKibbin, W., & Fernando, R. (2020). The economic impact of COVID-19. In R. Baldwin, & di Mauro B. W. (Ed.), Economics in the Time of COVID-19 (ss. 45-52). London: CEPR Press.
  • Muellbauer, J. (2014). Combatting Eurozone deflation: QE for the people. In Wouter J. Den Haan (Ed.), Quantitative Easing Evolution of economic thinking as it happened on Vox (ss. 163-174). London: CEPR Press.
  • Sahm, C. (2019). Direct stimulus payments to individuals. In H. Boushey, Nunn R., & Shambaugh J. (Ed.), Recession Ready: Fiscal Policies to Stabilize the American Economy (ss. 67-92). Washington: Brookings Institution.
  • Schlotmann, O. (2020). The COVID-19 Pandemic: Is Now the Time for Modern Monetary Theory or Permanent Monetary Finance? Available at SSRN 3607774.
  • Schwab, K., & Malleret, T. (2020). The Great Reset. Paper presented at the World Economic Forum: Geneva, Switzerland.
  • Sokol, M., & Pataccini, L. (2020). Winners And Losers In Coronavirus Times: Financialisation, Financial Chains and Emerging Economic Geographies of The Covid-19 Pandemic. Tijdschr Econ Soc Geogr, 111(3), 401-415. doi:10.1111/tesg.12433
  • Stephany, F., Stoehr, N., Darius, P., Neuhäuser, L., Teutloff, O., & Braesemann, F. (2020). The CoRisk-Index: A data-mining approach to identify industry-specific risk assessments related to COVID-19 in real-time. arXiv preprint arXiv:2003.12432.
  • Wren-Lewis, S. (2020). The economic effects of a pandemic. In R. Baldwin, & di Mauro B. W. (Ed.), Economics in the Time of COVID-19 (ss. 109-112). London: CEPR Press.

COVID-19 SÜRECİNDE HELİKOPTER PARA ÇÖZÜM MÜ?

Year 2023, Volume: 22 Issue: 46, 528 - 545, 25.06.2023
https://doi.org/10.46928/iticusbe.1101833

Abstract

Amaç: COVID-19 salgınının dünyada yayılmasıyla ülkelerde bir dizi kısıtlamalar ve kapanmalar gerçekleştirildi. Bu kısıtlamaların ve kapanmaların ekonomilerde durgunluğu tetiklemesi olasıdır. 1930’dan beri en kötü ekonomik kriz olma ihtimaline karşın politika yapıcılar bir dizi ekonomik paketini devreye almışlardır. Dolayısıyla ekonomik kriz ile mücadelede hanehalkına doğrudan para transferini gündeme getirmiştir. Bu doğrultuda helikopter para terimini açıklayarak salgın sürecinde alternatif çıkış yolu olarak görülen bu politikayı açıklamak ve çözüm önerisi olup olmayacağını araştırmaktır.
Kapsam: Şimdiye kadar süre gelen ekonomik darboğazlarda politika yapıcıların bir dizi mücadele paketlerini devreye almışlardı. Ancak salgın gibi öngörülemeyen durumlarda alışılagelmiş politikaların yeterli düzeyde etkili olmadığı kanısı ortaya çıkmıştır. Dolayısıyla beklenmedik krizlerde daha farklı politikalar tartışmaya ve uygulanma başlanmıştır.
Yöntem: Öncelikle salgının ekonomideki etkileri daha sonra politika önerileri literatür incelenmiş olup vurgu notları irdelenmiştir.
Sonuç: Deflasyonist ülkelerde helikopter paranın, enflasyon hedefinde diğer mali genişlemelerden daha güçlü olduğu kabul edilmektedir. Ancak enflasyonun yüksek olduğu ülkelerde helikopter para uygulaması hiperenflasyon yaratma riski barındırmaktadır. Ayrıca uygulama mali otoritelerin alanına girmekte ve merkez bankalarının özerkliğini tehlikeye düşürmektedir. Birçok ekonomilerde salgın sürecinin getirdiği olumsuz etkilerle mücadelede mali politikaların para politikalardan daha çok tercih edildiği görülmektedir.
Özgünlük: COVID-19 salgınında ekonomilerde kapsamlı politikalar devreye alınmıştır. Vergi indirimleri, kamu açıklarının finansmanı, özel sektöre para transferi gibi uygulamalar helikopter para örnekleri olarak bilinmekte ve bu bağlamda salgın sürecinde ekonomik tahribatın azaltılmasında helikopter para etkili olabilmesi değerlendirilmiştir.

References

  • Addison, T., Sen, K., & Tarp, F. (2020). COVID-19: Macroeconomic dimensions in the developing world: WIDER Working Paper.
  • Albert, J. F., & Tercero-Lucas, D. (2020). Monetary Policy in Times of Pandemic: Evaluation and Proposal of the Helicopter Money. Revista de economía mundial, 56(56), 35-55. doi:10.33776/rem.v0i56.4723
  • Baldwin, R., & Tomiura, E. (2020). Thinking ahead about the trade impact of COVID-19. In R. Baldwin, & di Mauro B. W. (Ed.), Economics in the Time of COVID-19 (ss. 59-72). London: CEPR Press.
  • Barua, S. (2020). Understanding Coronanomics: The economic implications of the coronavirus (COVID-19) pandemic. SSRN Electronic Journal, 1-44. doi: https://doi.org/10.2139/ ssrn.3566477.
  • Beckworth, D. (2020). COVID-19 Pandemic, Direct Cash Transfers, and the Federal Reserve. Mercatus Center Research Paper Series, Special Edition Policy Brief (2020).
  • Belke, A. (2018). Helicopter money: should central banks rain money from the sky? Intereconomics, 53(1), 34-40.
  • Bofinger, P., Dullien, S., Felbermayr, G., Fuest, C., Hüther, M., Südekum, J., & di Mauro, B. W. (2020). Economic implications of the COVID-19 crisis for Germany and economic policy measures. In R. Baldwin, & di Mauro B. W. (Ed.), Mitigating the COVID Economic Crisis: Act Fast and Do Whatever (ss. 167-178). London: CEPR Press.
  • Borio, C. (2020). The Covid-19 economic crisis: dangerously unique. Business Economics, 55(4), 181-190. doi:10.1057/s11369-020-00184-2
  • Boumans, D., Link, S., & Sauer, S. (2020). COVID-19: The world economy needs a lifeline-but which one? EconPol Policy Brief 27.
  • Brodeur, A., Gray, D., Islam, A., & Bhuiyan, S. (2021). A literature review of the economics of COVID-19. Journal of Economic Surveys, 35(4), 1007-1044. doi:10.1111/joes.12423
  • Buiter, W. H. (2014). The Simple Analytics of Helicopter Money: Why It Works - Always. Economics: the Open-Access, Open-Assessment E-Journal, 8(28), 1-38.
  • Couppey-Soubeyran, J. (2020). Helicopter money to combat economic depression in the wake of the Covid-19 crisis. Veblen Institut for Economic Reforms, 2, 1-13.
  • Di Giorgio, G., & Traficante, G. (2018). Fiscal shocks and helicopter money in open economy. Economic Modelling, 74, 77-87. doi:https://doi.org/10.1016/j.econmod.2018.05.005
  • Dorn, F., Fuest, C., Göttert, M., Krolage, C., Lautenbacher, S., Lehmann, R., . . . Reif, M. (2020). The economic costs of the coronavirus shutdown for selected european countries: A scenario calculation. EconPol Policy Brief 25.
  • Fernandes, N. (2020). Economic effects of coronavirus outbreak (COVID-19) on the world economy. Available at SSRN 3557504.
  • Friedman, M. (1969). The optimum quantity of money, and other essays. Chicago: Aldine.
  • Galí, J. (2020a). The effects of a money-financed fiscal stimulus. Journal of Monetary Economics, 115, 1-19. doi:https://doi.org/10.1016/j.jmoneco.2019.08.002
  • Galí, J. (2020b). Helicopter money: The time is now. In R. Baldwin, & di Mauro B. W. (Ed.), Mitigating the COVID Economic Crisis: Act Fast and Do Whatever (ss. 57-61). London: CEPR Press.
  • Gourinchas, P.-O. (2020). Flattening the pandemic and recession curves. In R. Baldwin, & di Mauro B. W. (Ed.), Mitigating the COVID Economic Crisis: Act Fast and Do Whatever (ss. 31-40). London: CEPR Press.
  • IMF. (2021). World Economic Outlook: Recovery during a Pandemic—Health Concerns, Supply Disruptions, Price Pressures. Washington, DC: International Monetary Fund.
  • Loayza, N., & Pennings, S. M. (2020). Macroeconomic policy in the time of COVID-19: A primer for developing countries. World Bank Research and Policy Briefs 147291, 1-9.
  • Ludvigson, S. C., Ma, S., & Ng, S. (2020). Covid19 and the Macroeconomic Efects of Costly Disasters. Cambridge: Working Paper 26987, National Bureau of Economic Research.
  • Masciandaro, D. (2020). The Helicopter Money Puzzle: Economic and Political Economy Arithmetic. In BAFFI CAREFIN Centre Research Paper.
  • McKibbin, W., & Fernando, R. (2020). The economic impact of COVID-19. In R. Baldwin, & di Mauro B. W. (Ed.), Economics in the Time of COVID-19 (ss. 45-52). London: CEPR Press.
  • Muellbauer, J. (2014). Combatting Eurozone deflation: QE for the people. In Wouter J. Den Haan (Ed.), Quantitative Easing Evolution of economic thinking as it happened on Vox (ss. 163-174). London: CEPR Press.
  • Sahm, C. (2019). Direct stimulus payments to individuals. In H. Boushey, Nunn R., & Shambaugh J. (Ed.), Recession Ready: Fiscal Policies to Stabilize the American Economy (ss. 67-92). Washington: Brookings Institution.
  • Schlotmann, O. (2020). The COVID-19 Pandemic: Is Now the Time for Modern Monetary Theory or Permanent Monetary Finance? Available at SSRN 3607774.
  • Schwab, K., & Malleret, T. (2020). The Great Reset. Paper presented at the World Economic Forum: Geneva, Switzerland.
  • Sokol, M., & Pataccini, L. (2020). Winners And Losers In Coronavirus Times: Financialisation, Financial Chains and Emerging Economic Geographies of The Covid-19 Pandemic. Tijdschr Econ Soc Geogr, 111(3), 401-415. doi:10.1111/tesg.12433
  • Stephany, F., Stoehr, N., Darius, P., Neuhäuser, L., Teutloff, O., & Braesemann, F. (2020). The CoRisk-Index: A data-mining approach to identify industry-specific risk assessments related to COVID-19 in real-time. arXiv preprint arXiv:2003.12432.
  • Wren-Lewis, S. (2020). The economic effects of a pandemic. In R. Baldwin, & di Mauro B. W. (Ed.), Economics in the Time of COVID-19 (ss. 109-112). London: CEPR Press.
There are 31 citations in total.

Details

Primary Language Turkish
Subjects Inflation
Journal Section Review
Authors

Masoud Sheıkhı 0000-0003-3493-8307

Rana Atabay Kuşçu 0000-0001-9968-5983

Publication Date June 25, 2023
Submission Date April 13, 2022
Acceptance Date June 12, 2023
Published in Issue Year 2023 Volume: 22 Issue: 46

Cite

APA Sheıkhı, M., & Atabay Kuşçu, R. (2023). COVID-19 SÜRECİNDE HELİKOPTER PARA ÇÖZÜM MÜ?. İstanbul Ticaret Üniversitesi Sosyal Bilimler Dergisi, 22(46), 528-545. https://doi.org/10.46928/iticusbe.1101833