Implementing Helicopter Money with Negative Interest Rates: Evidence from a Randomized Experiment

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In this paper, we estimate the marginal propensity to consume (MPC) in an experimentallocating monetary transfers at random to a sample representative of the population of French households. Our experiment provides 300 euro gift cards to participants, with three types of cards: (i) type 1 has no restrictions; (ii) type 2 expires three weeks after the date of receipt; (iii) type 3 has an automatic 10% negative interest rate at the end of each week. We study the participants’ spending behavior on the gift card and estimate their overall MPC using linked, comprehensive bank account data. We find that the MPC is much larger when the gift card features negativeinterest rates or an expiration date. We discuss the extent to which these findings are informative for macroeconomic models as well as for policy, e.g. for the design of direct transfers to households using central bank digital currency