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Time for Helicopter Money?

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Time for Helicopter Money?

Brookings Institution,

5 min read
5 take-aways
Audio & text

What's inside?

Low interest rates have not promoted economic growth, so it may be time to raise rates.

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Editorial Rating

8

Qualities

  • Innovative

Recommendation

Although interest rates are at all-time lows – even in negative territory in some countries – global growth remains tepid. Kemal Derviş of the Brookings Institution says that it is high time for central bankers to band together and start hiking up interest rates in order to ward off speculation and nip potential bubbles. Along with higher rates, policy makers should implement ways of injecting “helicopter money” into their economies to provide stimulus, build up infrastructure and educate people. getAbstract suggests Derviş’s provocative but topical paper to policy makers, economists and business executives.

Summary

It seems that central banks in the developed world have deployed all the weapons in their arsenals in battling the lackluster global recovery. Interest rates in some countries are in negative territory, but inflation is nowhere in sight, and growth remains subdued. Policy makers still have a fiscal tool at their disposal, though, in the form of a “helicopter drop,” which calls for printing money to enable public spending. Governments could invest that cash in infrastructure projects, thereby creating jobs and enhancing productivity. The money would directly reach middle- ...

About the Author

Kemal Derviş is vice president and director of global economy and development at the Brookings Institution.

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