IDEAS home Printed from https://ideas.repec.org/a/bpj/germec/v4y2003i3p341-364.html
   My bibliography  Save this article

Monetary Policy, Agency Costs and Output Dynamics

Author

Listed:
  • Linnemann Ludger

    (University of Cologne,Köln, Germany)

  • Schabert Andreas

    (University of Cologne,Köln, Germany)

Abstract

This paper examines the role of financial market imperfections for output reactions to nominal interest rate shocks. Empirical evidence shows a humpshaped impulse response function of output and suggests that credit supply co-moves with output. A monetary business cycle model with staggered price setting is presented where the firms’ outlays for capital and labor must be covered by the sum of net worth of entrepreneurs and loans in the form of debt contracts. These properties are shown to generate a hump-shaped impulse response of output, which takes on the smooth and persistent appearance of the empirical output response when nominal wages are set in a staggered way, too.

Suggested Citation

  • Linnemann Ludger & Schabert Andreas, 2003. "Monetary Policy, Agency Costs and Output Dynamics," German Economic Review, De Gruyter, vol. 4(3), pages 341-364, August.
    • Handle: RePEc:bpj:germec:v:4:y:2003:i:3:p:341-364
    DOI: 10.1111/1468-0475.00084
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1468-0475.00084
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1111/1468-0475.00084?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:germec:v:4:y:2003:i:3:p:341-364. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.