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Pandemic Recession and Helicopter Money: Venice, 1629-1631

Charles A.E. Goodhart, Donato Masciandaro, Stefano Ugolini
Published: 9 May 2022

Abstract: This paper analyses the monetary policy of the Most Serene Republic of Venice in the years of calamities using a modern equivalent of helicopter money, namely an extraordinary issue of (base) money, coupled with capital losses for the issuer. We treat the 1629 famine and the 1630-1631 plague as a unique negative macroeconomic shock, which the government addressed using fiscal monetization, with diverse effects on its citizens. Consolidating the balance sheets of the Treasury and of the State Bank of Issue, we show that the Republic implemented what was, in effect, helicopter money, with such policies most likely driven by political reasons, to limit public disturbances and riots.
Keywords: monetary policy / helicopter money / pandemic / Venice 1629-1631

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