Helicopter Drops and Liquidity Traps

Manuel Amador and Javier Bianchi

No 797, Working Papers from Federal Reserve Bank of Minneapolis

Abstract: 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.

Keywords: Helicopter drops; Central bank independence; Liquidity traps; Zero lower bound (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 E61 E63 (search for similar items in EconPapers)
Date: 2023-04-06
New Economics Papers: this item is included in nep-ban, nep-cba and nep-mon
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https://www.minneapolisfed.org/research/wp/wp797.pdf (application/pdf)

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Working Paper: Helicopter Drops and Liquidity Traps (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmwp:95949

DOI: 10.21034/wp.797

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