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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It also allows you to accept potential citations to this item that we are uncertain about. This allows to link your profile to this item. See costss information about how to correct material in RePEc. You can help adding them by using this form. Business upturns improve net worth, lower agency costs, and increase investment, which amplifies the upturn; vice versa, for downturns.


Agency Costs, Net Worth, and Business Fluctuations

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More about this item Statistics Access and download statistics. Shocks that affect net worth as in a debt-deflation can initiate fluctuations. More about this item Statistics Access and download statistics Corrections All material on this site has been provided by the respective publishers and authors.

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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.

Agency Costs, Net Worth, and Business Fluctuations

The mechanism is that higher borrower net worth reduces the agency costs of financing real capital investments. If you have authored this item and are not yet registered with RePEc, we encourage you cowts do it here. Corrections All material on this site has been provided by the respective publishers and authors.

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