This paper analyses the monetary policy that the Most Serene Republic of Venice implemented in the years of calamities using a modern equivalent of helicopter money, precisely an extraordinary money issuing, coupled with capital losses for the issuer. We consider the 1629 famine and the 1630-1631 plague as a negative macroeconomic shock that the incumbent government addressed using fiscal monetization. Consolidating the balance sheets of the Mint and of the Giro Bank, and having heterogenous citizens – inequality matters - we show that the Republic implemented what was, in effect, helicopter money driven by political economy reasons, in order to avoid popular riots.
Goodhart, C, D Masciandaro and S Ugolini (eds) (2021), “DP15715 Pandemic Recession, Helicopter Money and Central Banking: Venice, 1630”, CEPR Press Discussion Paper No. 15715. https://cepr.org/publications/dp15715