Rare Risk Event, Macroprudential and "Helicopter Drops"
This study assesses the effectiveness of macroprudential policy and "helicopter drops" in a DSGE model with dual financial frictions, focusing on rare risk events' impact on business conditions. The research reveals that rare events increase operating risk, leading to more significant effects on bank net assets and investment. The implementation of a macroprudential supervision mechanism can maintain bank credit and capital stability, enhancing social welfare. While "Helicopter Drops" are effective early on, they increase inflation and crowding-out effects on the private sector. The study provides insights into evaluating China's macro-financial regulations
Year of publication: |
2023
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Authors: | Yao, Haixiang ; Zhang, Weixuan ; Zhang, Hanwen |
Publisher: |
[S.l.] : SSRN |
Saved in:
freely available
Saved in favorites
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