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Pandemic recession, helicopter money and central banking: Venice, 1630

Goodhart, C. A. E., Masciandaro, Donato and Ugolini, Stefano (2021) Pandemic recession, helicopter money and central banking: Venice, 1630. CEPR discussion paper series (15715). Centre for Economic Policy Research (CEPR), London, UK.

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Abstract

This paper analyses the monetary policy that the Most Serene Republic of Venice implemented in the years of calamities using a modern equivalent of helicopter money, precisely an extraordinary money issuing, coupled with capital losses for the issuer. We consider the 1629 famine and the 1630-1631 plague as a negative macroeconomic shock that the incumbent government addressed using fiscal monetization. Consolidating the balance sheets of the Mint and of the Giro Bank, and having heterogenous citizens - inequality matters - we show that the Republic implemented what was, in effect, helicopter money driven by political economy reasons, in order to avoid popular riots.

Item Type: Monograph (Discussion Paper)
Official URL: https://cepr.org/content/discussion-papers
Additional Information: © 2021 The Authors
Divisions: Financial Markets Group
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HJ Public Finance
H Social Sciences > HG Finance
J Political Science > JN Political institutions (Europe)
JEL classification: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D70 - General
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E50 - General
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy Formation, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E60 - General
N - Economic History > N1 - Macroeconomics and Monetary Economics; Growth and Fluctuations > N10 - General, International, or Comparative
N - Economic History > N2 - Financial Markets and Institutions > N20 - General, International, or Comparative
Date Deposited: 27 Jan 2021 08:51
Last Modified: 29 Jan 2021 11:48
URI: http://eprints.lse.ac.uk/id/eprint/108555

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