This paper examines optimal policy in a macroeconomic model with collateral constraints. Binding collateral constraints yield inefficient competitive equilibrium allocations because they distort the optimal utilization of real resources. I identify the set of policy instruments that can be used...

This paper begins by arguing that the 2007/8 credit crunch does not require a fundamental re-evaluation of monetary policy. The crunch occurred because regulation was too lax, and we need to develop new and more effective tools of regulatory control. To focus on current account imbalances or...

Monetary restraint in Poland does not operate in the expected manner under the conditions of predominant state ownership of both banks and industrial enterprises. With effective owners' control being prohibitively costly in the state-owned firms, "nobody's" banks continue their old lending...