A leading bank economist says helicopters would help revive the stagnating global economy, whether they are carrying money or missiles, but far preferably the former.

Citi's chief global economist Willem Buiter, currently visiting Australia for a series of meetings, said urgent action is needed to short-circuit continued economic stagnation and damaging long-term unemployment.

"Today's unemployment creates the future unemployables - it leads to the deskilling and it leads to the stigmatisation of the unemployed," he told a breakfast briefing of financial journalists in Sydney.

Dr Buiter said governments must intervene to boost a struggling private sector, currently unwilling to invest.

A big stimulus to demand - a war would do it - but preferably sensible fiscal stimulus, reawakening of animal spirits in the private sector.

While quipping about military boosts to demand, Dr Buiter said there are many sensible options open to governments.

"Most likely by deregulation or sensible tax reforms, infrastructure spending would also help," he added.

The internationally respected economist, formerly a professor at the London School of Economics before taking up his current role at Citigroup, gave an endorsement of at least one of the Australian Government's signature policies as a means to kick-start growth.

"Corporate tax cuts would be an obvious example, infrastructure investment, depending on the country, likewise," he said.

Bring in the choppers

Dr Buiter is a big fan of infrastructure investment, particularly in the United States, where he said infrastructure had not improved since he first visited the nation in 1971.

He also put forward a contentious proposal for many countries to pay for it - helicopter money.

"It's the obvious solution in countries that:

Have a negative output gap, excess capacity;

Have a negative output gap, excess capacity; High public debt, and where therefore regular fiscal stimulus funded through debt issues in the market would threaten sovereign solvency; and

High public debt, and where therefore regular fiscal stimulus funded through debt issues in the market would threaten sovereign solvency; and Inflation below target, because then you can have monetised fiscal stimulus, which is all that helicopter money is, without threatening price stability and saying the ghost of Weimar is going to kill us."

Helicopter money is where the central bank funds part of the national government's deficit spending through effectively printing new money.

In the past it has lead to hyperinflation, such as famously in the German Weimar Republic of the 1920s.

However, Dr Buiter said the current environment of low inflation, and even deflation in some areas, is a perfect one for helicopter money to succeed.

It's politics that stops it, and ignorance, and that's a powerful combination.

Dr Buiter said true helicopter money is "verboten" in the eurozone, due to its fiscal and monetary rules, and also due to Germany's negative historical experience of hyperinflation.

Sorry, this video has expired Extended interview with Willem Buiter ( Ticky Fullerton )

'Mini helicopter money' already underway

However, he added that the European Central Bank was engaged in a miniature facsimile of helicopter money with its various stimulus programs.

Dr Buiter believes the US Federal Reserve would be open to the idea, but the economic situation would need to deteriorate seriously before it was considered, and Congress may prove an insurmountable barrier.

Japan is believed to be actively considering some form of helicopter money, but Dr Buiter expects that the finance ministry's opposition will see any such program limited to around $US20 billion.

He said China may be forced to consider helicopter money further down the line if its economy experiences a very hard landing, but it had a hyperinflation experience after World War Two that will make it very cautious to engage in money printing.

Sorry, this audio has expired Reserve Bank ponders stimulus beyond rate cuts

Australia's Reserve Bank has all but dismissed the idea of helicopter money, even if interest rates fell to 1 per cent or below and more stimulus is needed.

Dr Buiter said the UK is currently the only country likely to engage in a significant helicopter money program if the economic fallout from Brexit worsens, but he added that it is a relatively insignificant country in a global economic context.