Pandemic Recession and Helicopter Money: Venice, 1629–1631

Charles Goodhart , Donato Masciandaro , Stefano Ugolini (1)

1 LEREPS - Laboratoire d'Etude et de Recherche sur l'Economie, les Politiques et les Systèmes Sociaux

We analyse the money-financed fiscal stimulus implemented in Venice during the famine and plague of 1629–31, which was equivalent to a ‘net-worth helicopter money’ strategy – a monetary expansion generating losses to the issuer. We argue that the strategy aimed at reconciling the need to subsidize inhabitants suffering from containment policies with the desire to prevent an increase in long-term government debt, but it generated much monetary instability and had to be quickly reversed. This episode highlights the redistributive implications of the design of macroeconomic policies and the role of political economy factors in determining such designs.

Keywords: Monetary policy; Helicopter money; Pandemic; Venice 1629-1631

Domains: Economics and Finance; History; General Finance [q-fin.GN]

Charles Goodhart, Donato Masciandaro, Stefano Ugolini. Pandemic Recession and Helicopter Money: Venice, 1629–1631. Financial History Review, 2021, 28 (3), pp.300-318. ⟨10.1017/S0968565021000214⟩. ⟨hal-03522231⟩