The Financial Accelerator and the Flight to Quality / Ben Bernanke, Mark Gertler, Simon Gilchrist.

Format:

Book

Author/Creator:

Bernanke, Ben.

Contributor:

National Bureau of Economic Research.

Gertler, Mark.

Gilchrist, Simon.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4789.

NBER working paper series no. w4789

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1994.

Summary:

Adverse shocks to the economy may be amplified by worsening credit-market conditions-- the financial 'accelerator'. Theoretically, we interpret the financial accelerator as resulting from endogenous changes over the business cycle in the agency costs of lending. An implication of the theory is that, at the onset of a recession, borrowers facing high agency costs should receive a relatively lower share of credit extended (the flight to quality) and hence should account for a proportionally greater part of the decline in economic activity. We review the evidence for these predictions and present new evidence drawn from a panel of large and small manufacturing firms.

Notes:

Print version record

July 1994.