This paper studies optimal monetary and fiscal policy rules when government debt and capital serve as collateral in financial markets. When borrowing constraints tighten, collateral premiums distort investment and production. The paper examines how monetary policy should respond to these financial conditions and finds that optimal policy actively eases when collateral premiums rise.
Capital can substitute for government debt in collateral markets. When the collateral premium is high, firms may overaccumulate capital to relax borrowing constraints. Government debt can crowd out this inefficient capital demand while also creating fiscal costs through debt service and distortionary taxation.
Russia's wartime economy can be divided into three phases: the initial 2022 shock, the 2023–24 overheating period, and the 2025 slowdown. I examine how fiscal expansion, defense spending, interest-rate policy, capital controls, and tax increases were combined to stabilize the Ruble and inflation while sustaining wartime demand. A postwar soft landing will require renewed investment because labor shortages and intensive capital utilization have increased the risk that aging equipment becomes a future production bottleneck.
The Iran war and disruption to global energy supply altered Russia's fiscal outlook by raising global oil prices and improving revenues from energy exports. I examine how this external shock temporarily eased fiscal pressure caused by weak oil-and-gas revenues and persistent wartime expenditure, while also narrowing the discount on Russian crude and delaying planned fiscal tightening. However, this improvement represents only a short-term buffer, and I also discuss its implications for Korea's energy security and supply diversification.
The July 2026 Korea–Mongolia summit broadened the institutional basis for economic cooperation between the two countries. We examine the in-principle conclusion of CEPA negotiations and expanded cooperation in critical minerals, energy transition, infrastructure, climate policy, digital technology, and people-to-people exchange. Many of these outcomes remain at the MOU stage, however, and their long-term economic impact will depend on implementation, private investment, and effective follow-up mechanisms.
Russia’s wartime economy has preserved output partly by drawing heavily on its labor force and existing capital stock. I examine how emigration, mobilization, casualties, and persistent labor shortages are interacting with declining investment and increasingly intensive use of machinery, raising the risk of a prolonged postwar production constraint. I argue that immigration, automation, and capital renewal will all be necessary if Russia is to restore productive capacity after the war, while also discussing the potential implications for Korean firms if economic relations with Russia eventually reopen.