Unconventional monetary policies can combat inflation in liquidity traps effectively.
The article explores why economies can get stuck in a liquidity trap and how unconventional monetary policies like helicopter money and negative interest rates can help. It shows that liquidity traps can happen due to various reasons like less bonds, lower capital productivity, or higher consumption demand. In a liquidity trap, regular monetary policies can't control inflation, but unconventional ones can. Increasing the bonds-to-money ratio is the best way to improve welfare in this situation.