Breaking the monetary financing taboo: are we ready or are we opening the Pandora’s box?

Last registered on March 22, 2022

Pre-Trial

Trial Information

General Information

Title
Breaking the monetary financing taboo: are we ready or are we opening the Pandora’s box?
RCT ID
AEARCTR-0008819
Initial registration date
January 14, 2022

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
January 19, 2022, 4:23 PM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated
March 22, 2022, 12:46 PM EDT

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Region
Region
Region

Primary Investigator

Affiliation
Bank of Canada and University of Amsterdam

Other Primary Investigator(s)

PI Affiliation
Minho University
PI Affiliation
University of Amsterdam, Bank of Canada, TI

Additional Trial Information

Status
On going
Start date
2021-12-01
End date
2022-11-01
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
The unprecedented scale of the COVID-19 crisis has revived support to groundbreaking fiscal options, including monetary financing, via the metaphor of the “helicopter money”. While this option may appear as a lesser evil at a first glance, economists widely agree that money creation, especially if repeatedly used, entails potentially large economic and political risks. Where do citizens stand? Would a one-time use of money printing open up the Pandora’s box and develop unrealistic expectations among citizens? Or can targeted communication manage their expectations? This project aims to conduct experiments within a large-scale survey with two main goals. First, we aim to measure what lay people really know and understand about public finances via the construction of a fiscal literacy score. Second, we aim to study how the public learns from various presentations of governmental funding options.
External Link(s)

Registration Citation

Citation
Hommes, Cars, Salle Isabelle and Julien Pinter. 2022. "Breaking the monetary financing taboo: are we ready or are we opening the Pandora’s box? ." AEA RCT Registry. March 22. https://doi.org/10.1257/rct.8819
Sponsors & Partners

Sponsors

Partner

Experimental Details

Interventions

Intervention(s)
An online household survey is conducted in three countries and two waves with the help of a large international marketing research company. The respondents are representative of the general population in terms of gender, age, education level, geographic location, and, as much as possible, income. We use a between-subject design to evaluate how different pieces of information may alter respondents' beliefs and opinions about fiscal policy options and knowledge about public finances.
Intervention Start Date
2021-12-01
Intervention End Date
2022-03-31

Primary Outcomes

Primary Outcomes (end points)
There are three main end points: i) the fiscal literacy score (overall knowledge of public finances), between 0 and 5; ii) the support for exceptional monetary financing as evidenced by the fraction of people declaring to support such a policy, and iii) the support for central bank independence, as evidenced by the fraction of people willing to sign the corresponding petition.
Primary Outcomes (explanation)
The "fiscal literacy" score consists in the aggregation of the correct answers out of the five knowledge questions on the matter. The rest of the measurements does not require any transformation of the collected variables.

Secondary Outcomes

Secondary Outcomes (end points)
We are also looking at i) people's opinions about debt financing versus monetary financing options, as reported in the open-ended questions; and ii) expectations about the effects of these financing options on future inflation and taxes, as evidenced by the answers to the corresponding thought experiments.
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
One control group and four treatments are designed, in a 2-by-2 + 1 design where we vary the information that is presented or not to the respondents, in terms of quantity, source and medium of communication. The two main treatment variables are i) the presence or absence of an educational video about taxes, public debt and monetary financing; and ii) the presence or absence of a central bank communication piece arguing against monetary financing. The control group corresponds to the case where the respondents do not see any piece of information (neither the educational video, nor the central bank's piece). The additional treatment considers a newspaper piece from a famous economist arguing for a one-time monetary financing operation in the wake of the COVID-19 pandemic in 2020, on top of the display of the video and the central bank piece.
Experimental Design Details
Not available
Randomization Method
Computerized randomization at the beginning of the questionnaire, one draw for each respondent (outsourced to the marketing research company).
Randomization Unit
individual (survey respondents)
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
No cluster
Sample size: planned number of observations
2200 in Italy, 2200 in the Netherlands and 4000 in France for the first wave; 2800 in France for the second wave (foreseen, depending on the recontact rate).
Sample size (or number of clusters) by treatment arms
1680 observations per treatment (8400/5)
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
The minimum detectable effect size depends on the fraction of inattentive respondents that will be discarded out of the 1680 observations per treatment. Assuming less than 5% of the respondents are discarded (based on pilot data), we are left with about 1600 per treatment. Assuming a 80% power and a 5% threshold for the normal distribution: - A 5 percentage point cross-treatment difference in a dichotomous variable shall be detectable (ex: 20 vs 25% of people signing the petition between two treatments: [(0.2*0.8+0.25*0.75)/sqrt(0.05^2)]*7.9 = 1,100 per treatment). an effect size of 5p.p. between 20% and 25% across two treatments is detectable, a 4% is not (would need 1690 subjects). - For a continuous outcome, for instance in the knowledge score, a difference as small as 0.12 (score from 0 to 5), with a standard deviation of 1.2 (based on pilot data) should be detectable (7.9*2/((0.12/1.2)^2)=1,580). With a standard deviation of up to 2, the difference shall be at least 0.2 to be detectable (1,580 respondents).
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number