Universal Basic Income and Helicopter Money

Abstract

AbstractA unique opportunity for testing whether universal basic income (UBI) on the European level is a realistic option could be provided by its monetary financing as an alternative to “traditional” fiscal financing. Fiscal financing of UBI would namely request a much larger European “federal” budget financed by a specific European tax or by participation of the “federation” on some of the existing tax bases, and by agreed upon allotment of the accumulated “federal” fiscal revenues. Though ensuing redistribution of GDP would be relatively modest, the European UBI without an alternative to the tax revenues requirements remains illusionary. Helicopter money (HM) replacing quantitative easing (QE) might provide such an alternative. Modalities of its implementation differ and the idea raises questions of its compliance with the legal regime of the ECB and opens many other topics such as the effectiveness of “QE for the people” and its long-run consequences.