This paper embeds a long-term financial contract subject to asymmetric information into an industry equilibrium model to explore the quantitative implications of endogenous financing constraints for job reallocation. In the model, firms sign upon entry long-term contracts with banks that finance...

This paper discusses two variations to the optimal lending contract under asymmetric information studied in Clementi and Hopenhayn (2006). One variation assumes that the entrepreneur is less patient than the bank, and the other assumes the bank has limited commitment.The qualitative properties...

This paper illustrates how occasionally binding credit constraints can be quantitatively important to delivering business-cycle asymmetries. An empirical exercise suggests that countries display some business-cycles asymmetries, and an open-economy real business-cycle model is assessed where an...