Fed/GFLEC Financial Literacy Seminar Series

March 2, 2023

12:00 PM - 1:00 PM ET

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

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Xavier Jaravel

Associate Professor of Economics. Department of Economics, London School of Economics and Political Science




In this paper, we estimate the marginal propensity to consume (MPC) in an experiment allocating 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 negative interest 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.


Dr. Xavier Jaravel is an Associate Professor of Economics at the London School of Economics, where he teaches public economics and how to use micro data and methods to answer macro questions. His research focuses on innovation and productivity, with related work on trade and applied econometrics. He is also a member of the French Council of Economic Analysis, a non-partisan body which advises the Prime Minister, and the 2019 recipient of the Philip Leverhulme Prize.