DP15715 Pandemic Recession, Helicopter Money and Central Banking: Venice, 1630

Author(s): Charles A Goodhart, Donato Masciandaro, Stefano Ugolini
Publication Date: January 2021
Keyword(s): central banking, Helicopter money, monetary policy, Pandemic, Venice 1630
JEL(s): D7, E5, E6, N1, N2
Programme Areas: Economic History, Monetary Economics and Fluctuations
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15715

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 â?? 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.