Skip to main content

Helicopter Drops and Liquidity Traps

Working Paper 797 | Revised April 14, 2023

Download PDF


Manuel Amador Monetary Advisor
Javier Bianchi Monetary Advisor
Helicopter Drops and Liquidity Traps


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. In our model, even with balance sheet constraints, helicopter drops are at best irrelevant under commitment.