Implementing Helicopter Money: A Randomized Policy Evaluation – HELIMON

With interest rates at zero, central banks need to rely on unconventional policy measures to stimulate the economy. We propose a specific form of a direct monetary transfer to households and evaluate its impact on consumption using a randomized controlled trial. Subjects receive monetary transfers in the form of pre-paid debit cards; treatment and control groups vary in whether (and how fast) the unspent value of the card decreases over time. Our hypothesis is that negative interest rates on the unspent value induce a higher propensity to consume out of the transfer, which would improve the effectiveness of such a transfer as a means to stimulate demand. We design the transfer in a way that is politically and economically feasible, and, if the trial is successful, could be scaled to the national scale.