Proposing in Germany this evening : helicopter money less dangerous than negative interest rates . @CESifoGroup @SZ Ifo.de
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@AdairTurnerUK ? Not alternatives. HM will mean taking 'hands off' interest rates, and therefore may well mean negative numbers.
@t0nyyates Actually not correct.See my paper to IMF Research conf. Nov2015. Central bank can pay different rate on different reserve tiers
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@AdairTurnerUK interest rates on all other assets but what you are calling required reserves will fall in response to HM. -
@AdairTurnerUK the IORR won't be a meaningful policy instrument subsequently. I don't think this is a disadvantage of HM actually. -
@AdairTurnerUK incidentally, it's not right to suggest demand mgt by fiscal policy requires sticky prices or wages. -
@AdairTurnerUK many counter egs; see, for example, Roger Farmers' recent. -
@AdairTurnerUK fwiw I think you are heroically confident in ability to calibrate HM; + downplay greatly risk of loss of faith in money. -
@AdairTurnerUK final pt; other instruments cd be used to constrain leverage assoc with -ve rates. -
@AdairTurnerUK there are issues with those of course, but you imply by your silence on those that they are not there or totally ineffective.
End of conversation
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