Copter Money Without the Fed

Drop It: You Can Call for Helicopter Money but Drop the Call for “Coordination” by Scott Fullwiler Originally posted at New Economic Perspectives. I suggested more than three years ago that helicopter drops are fiscal operations (printable version here), in contrast to the more traditional view that they were monetary policy operations (e.g., “Helicopter Ben”). …

Understanding the Permanent Floor—An Important Inconsistency in Neoclassical Monetary Economics

by Scott Fullwiler, New Economic Perspectives I’ve written numerous times already about how a deficit “financed” by bonds vs. “money” doesn’t matter in terms of inflationary effect.  Notwithstanding my views there (which are not discussed in this post), the point of this post will be to explore the neoclassical paradigm on this matter, since this …

Aggregate Demand and Austerity

Both modeling and the historical record indicate that austerity in the midst of a balance sheet recession leads to increased deficits. The historical analogy frequently raised by Richard Koo, who argues that the attempt by the Japanese government in 1997 to reduce budget deficits in the midst of a balance-sheet recession resulted in larger deficits, not smaller ones. We may be already seeing the same thing in the UK, as deficits there are now growing in the aftermath of austerity measures undertaken late last year.