Reemergence of debate on helicopter money - Nomura

Analysts at nomura explained that there was heated debate about helicopter money in summer 2016.

Key Quotes:

"We think this originated from expectations for fiscal expansion and monetary easing increasing at the same time. With growing concerns about a downturn in the economy stemming from yen appreciation and lower share prices in the first half of the year along with the Brexit vote, the view that economic stimulus measures would increase in scale gained ground. Meanwhile, with underlying inflation losing pace, speculation increased about the BOJ stepping up monetary easing.

There tends to be speculation about fiscal and monetary policy moving in step when downturns in the economy and prices become a point of focus. In 2017, the state of affairs overseas needs to be watched as a potential trigger for such a situation. Fiscal expansion in the US faltering or aggressive steps to weaken the dollar would warrant attention. Concerns also remain about protectionist political parties making gains in elections in Europe.

We assume a downturn in the global economy and yen appreciation in these circumstances. If there is major downward pressure on the Japanese economy and prices, the view could emerge that cooperative measures from the government and BOJ were necessary, and it would not be surprising to see the debate about helicopter money reemerge."