present a theoretical model that explicitly motivates how financial factors may affect investment. We then report some … the effects of capital market frictions on investment should be asymmetric -- having more impact in recessions than booms …

We present a simple framework that incorporates a role for "interest rate spreads" in models of investment fluctuations …. Formally, we develop a simple model of investment and financial contracting under asymmetric information that can he used to … generate an Euler equation describing firms' intertemporal decisions about investment. The Euler equation is than estimated …