NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Financial Capacity, Reliquification, and Production in an Economy with Long-Term Financial Arrangements

Mark Gertler

NBER Working Paper No. 2763
Issued in November 1988
NBER Program(s):   EFG   ME

This paper characterizes a multi-period production economy in which borrowers and lenders enter long-term financial contracts. A key feature is that aggregate production and borrowers' capacity to absorb debt -- their "financial capacity" - are jointly determined endogenous variables, in the spirit of Gurley and Shaw (1955) Expectations of future economic conditions govern financial capacity, which in turn influences current capacity utilization. Further, disturbances in the present may persist into the future by influencing borrowers' net asset positions. Finally, borrowers may substitute future for current production by preserving their assets in hard times, behavior akin to reliquification as described in Eckstein and Sinai (1986).

download in pdf format
   (297 K)

download in djvu format
   (191 K)

email paper

This paper is available as PDF (297 K) or DjVu (191 K) (Download viewer) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w2763

Published: "Financial Capacity and Output Fluctuations in an Economy with Multiperiod Financial Relationships." Review of Economic Studies, July 1992,p. 455-492

Users who downloaded this paper also downloaded these:
Gertler and Hubbard w2758 Financial Factors in Business Fluctuations
Bernanke and Gertler w2318 Financial Fragility and Economic Performance
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us