Helicopter Drops and Liquidity Traps

Manuel Amador & Javier Bianchi
Working Paper 31046
DOI 10.3386/w31046
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We show that if the central bank operates without commitment and faces constraints on its balance sheet, helicopter drops can be a useful stabilization tool during a liquidity trap. With commitment, even with balance sheet constraints, helicopter drops are, at best, irrelevant.

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Topics

Macroeconomics
Business Cycles
Monetary Policy
Fiscal Policy

Programs

Economic Fluctuations and Growth
International Finance and Macroeconomics
Monetary Economics

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SI 2023 Impulse and Propagation Mechanisms

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