Helicopter Money :-
■ Helicopter Money :
• HELICOPTER MONEY :
It is an unconventional monetary policy tool. To inject cash into the economy. Through printing large sums of money. Distributing it among the general public to stimulate the economic growth.
■ how it works :
•Direct transfers to peoples account.
•Cutting down taxes.
•Government Spending.
● THE TERM ‘HELICOPTER MONEY’? Well known economist, Milton Freidman introduced the concept of helicopter money in his paper.The Optimum Quantity of Money in 1960. The basic principle behind this is that the central banks want to increase inflation and output. Therefore, this assumption implied that the influx of money in the economy will be used to purchase goods and services.
■ NEGATIVE CONSEQUENCES
•May lead to hyper inflation.
•Rapid Depreciation of Rupee.
•People may keep this money in their savings accounts.
● WHEN IT SHOULD BE USED?
Helicopter money is a tool to be adopted during fiscal crises when conventional monetary policies are not efficient enough to help the economy to recover.
Economies mainly consider it as an alternative to fight back deflation.
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