Meh, Césaire A.; Moran, Kevin - In: Journal of Economic Dynamics and Control 34 (2010) 3, pp. 555-576
The recent financial turmoil has underlined the importance of analyzing the link between banks' balance sheets and economic activity. We develop a dynamic stochastic general equilibrium model in which bank capital mitigates an agency problem between banks and their creditors. As a result, the...