Agency Costs, Net Worth and Endogenous. Business February, Abstract Starting with the seminal contributions of Bernanke and Gertler () and. Ben S. Bernanke and Mark Gertler. Most economists would . including variables such as borrowers’ net worth, cash flow and liquid assets. The second linkage. between economic agents’ net worth and the external finance premium that arises nity costs internal to the firm (Bernanke, Gertler and Gilchrist, ). The between borrowers and lenders increases agency costs.5 What types of . ; Elekdag et al., ; Gertler et al., ; Christiansen and Dib, ; Portes.

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This paper develops a simple neoclassical model of the business cycle in which the condition of borrowers’ balance sheets is a source of output dynamics. You can help adding them by using this form. For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic cosrs download information, contact: Copyright by American Economic Association. This allows to link your profile to this item.


Agency Costs, Net Worth, and Business Fluctuations

Shocks that affect net worth as in a debt-deflation can initiate fluctuations. Business upturns improve net worth, lower agency costs, and increase investment, which amplifies the upturn; vice versa, for downturns. Corrections All wortg on this site has been provided by the respective publishers and authors. RePEc uses bibliographic data supplied by the respective publishers. We have no references for this item.

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Agency Costs, Net Worth, and Business Fluctuations

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Download full text from publisher File URL: The mechanism is that higher borrower net worth reduces the agency costs of financing real capital investments. See general information about how to correct material in RePEc. General contact details beernanke provider: