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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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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. Business upturns improve net worth, lower agency costs, and increase investment, which amplifies the upturn; vice versa, for downturns. Bernanke, Ben Gertler, Mark.

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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. The mechanism is that higher borrower net worth reduces the agency costs of financing real capital investments.

Shocks that affect gertlre worth as in a debt-deflation can initiate fluctuations. It also allows you to accept potential nt to this item that we are uncertain about.


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Agency Costs, Net Worth, and Business Fluctuations

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