Ct. Carlstrom et Ts. Fuerst, AGENCY COSTS, NET WORTH, AND BUSINESS FLUCTUATIONS - A COMPUTABLE GENERAL EQUILIBRIUM-ANALYSIS, The American economic review, 87(5), 1997, pp. 893-910
This paper develops a computable general equilibrium model in which en
dogenous agency costs can potentially alter business-cycle dynamics. A
principal conclusion is that the agency-cost model replicates the emp
irical fact that output growth displays positive autocorrelation at sh
ort horizons. This hump-shaped output behavior arises because househol
ds delay their investment decisions until agency costs are at their lo
west-a point in time several periods after the initial shock.