An analysis of liquidity traps using an adaptive learning approach shows monetary easing policies may allow an economy to break free of these situations under certain conditions, a paper published this month by the Bank of Finland argues.

In Monetary policies to counter the zero interest rate: an overview of research, Seppo Honkapohja, a board member of the central bank, analyses expectations-driven liquidity traps using a macroeconomic model, which gives agents an adaptive learning approach