By Scott Sumner
„The Financial Times has an article that discusses how central banks could give away money during a recession, in order to stimulate the economy:
In the past, central banks set the price of money using interest rates. In the future, it seems, they will be giving it away. . . . One problem with this common sense idea is its simplicity, which rarely appeals to economists charged with taking important decisions.
I like uncomplicated ideas, but I don’t see how this idea would be “simple”. Who would get the money? You might argue for a neutral policy of everyone getting a check for $5000. But even that raises questions. Does everyone include children, or is it $5000 per household? Those decisions have distributional consequences, and have traditionally been made by elected representatives.“ (…)
