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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Agency Costs, Net Worth, and Business Fluctuations

Bernanke, Ben Gertler, Mark. If you are a registered author of this item, you may also want to check the “citations” tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.


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Business upturns improve net worth, lower agency costs, and increase investment, which amplifies the upturn; vice versa, for downturns. More about this item Statistics Access and download statistics Corrections All material on this site has been provided by the respective publishers and authors. Help us Corrections Found an error or omission? General contact details of provider: More about this item Statistics Access and download statistics.

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If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. Shocks that affect net worth as in a debt-deflation can initiate fluctuations. We have no references for this item. Copyright by American Economic Association. It also allows you to accept potential citations to this item that we are uncertain about. The mechanism is that higher borrower net worth reduces the agency costs of financing real capital investments.


Agency Costs, Net Worth, and Business Fluctuations

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. As the access to this document is restricted, you may want to search for a different version of it. You can help adding them by 20066 this form. See general information about how to correct material in RePEc.

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