Uhlig.

• Position: Liquidity traps

Uhlig attempts to gain more insight into liquidity traps, Friedman's rule, and runaway deflation. He first finds that Friedman's rule can be implemented by shrinking the money stock at the appropriate rate over the long run. Therefore, increases in the money stock -- be they through outright "helicopter drops," through any type of open market operation, or through foreign exchange intervention -- change nothing as long as the economy remains in the equilibrium of a long-run shrinkage of the money stock. Next, Uhlig examines two simple reduced form models of the...