Work detail

Helicopter Money and the Propensity to Consume Transfers: The Case of Czech Republic

Author: Bc. Jakub Doležal
Year: 2022 - summer
Leaders: prof. PhDr. Tomáš Havránek Ph.D.
Work type: Bachelors
Language: English
Pages: 48
Awards and prizes:
Abstract: The thesis discusses the topic of helicopter money — unconventional monetary policy aimed at increasing sub-target inflation and reviving GDP growth
when the orthodox monetary policy is constrained by the zero lower bound
(ZLB) on policy rates. From the perspective of the households, helicopter money
transfer is a windfall gain. Part of the transfer — marginal propensity to consume (MPC) — is within weeks turned into consumption. MPC directly affects
the outcomes of the policy, it is therefore advisable to predict it. The first
part of the thesis describes unconventional monetary with special emphasis on
helicopter money, quantitative easing and debt monetization. The second part
is then devoted to identifying country-level drivers of MPC and subsequently
predicting average MPC across Czech households using meta-analytic approach.
While controlling for publication bias and performing variables selection through
Least Absolute Shrinkage and Selection Operator (lasso) the model predicts average marginal propensity to consume the transfer ranging from 0.46 to 0.51
during the years of sub-target inflation and under ZLB on policy rates within
the Czech economy


Česká Spořitelna


Patria Finance