This paper endeavours to illustrate the consequences of a credit squeeze by inserting a standard model of retail banks into some familiar macroeconomic models. Some possible policy conclusions are drawn about the benefits of incentives to increase lending at these times, and to reduce it in much...

This paper endeavours to illustrate the consequences of a credit squeeze by inserting a standard model of retail banks into some familiar macroeconomic models. Some possible policy conclusions are drawn about the benefits of incentives to increase lending at these times, and to reduce it in much...

Many central banks have seen a recent increase in their autonomy in monetary policy, and also a transfer of supervisory and regulatory responsibilities to other bodies. But the maintenance of financial stability is, and remains, a core function for all central banks. This paper presents details...