Evi Pappa
Universidad Carlos III
will give a presentation on
It's Raining Money, Hallelujah: Empirical Evidence on the Effects of Helicopter Money Drops, joint with
Abstract:
We derive direct inference on the macroeconomic effects of helicopter money drops using the random allocation of the Spanish Christmas Lottery in different provinces, as a natural experiment. This is the only case in the world where individuals living in one region randomly receive pure monetary transfers of a considerable amount. In particular, we study the monthly regional level data on unemployment from the National Employment Agency (SEPE) and CPI prices from the Spanish Statistical Office (INE) and individual and regional data on consumer sentiment regarding the Spanish and individual economic outlook drawn from the Spanish Center of Sociological Research (CIS). We show, using local projections, that the money drops reduce unemployment and increase CPI prices at the regional level. Money drops significantly boost economic sentiment for both current and future economic conditions both at the province and at the individual level and their effects are stronger during recessions. Such policies impact mostly the sentiment of younger, less educated and poorer individuals and women.
joint with Isabel Mico and Morteza Ghomi