Where will "helicopter money" to fight the effects of coronavirus come from? Rolling the currency press is an obvious short-term answer, but long-lasting solutions will have to come from fiscal policy. Temporary, time-limited measures are one thing, but once reductions in things like payroll taxes set in, they will be very hard to take away. At current interest rates, the affordability of expanding government balance sheets means there is headroom. Governments should use it. But bond markets will not allow unfunded mandates forever. While policymakers seek new ways to put money back in people's pockets, I hope they will see targeted, stable, and permanent greenhouse gas taxes as the way forward on balancing our books. Monday's fall in the oil price was a rough simulation of a surprise $50/tonne upstream carbon tax. Taking that bold action now would keep producer prices lower for much longer, provide a competitive jolt for clean energy jobs, and ensure the money we need to put in consumers pockets is not robbing young people of the tools they will need to fight future challenges. #carbonpricing #renewables #risk
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