We integrated frictional financial intermediation into a Tractable Heterogeneous Agents New Keynesian model. With the incorporation of income risk, the rare events trigger a sharper consumption decline due to precautionary saving. Aggregate rare events shock exacerbate income and consumption...

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...