We extend the Carlstrom and Fuerst (American Economic Review,1997, 87, pp. 893–910) agency cost model of business cycles by includingtime-varying uncertainty in the technology shocks that affectcapital production. We first demonstrate that standard linearizationmethods can be used to solve the...

This paper analyzes the effects of bank lending on German commercial property prices. The theory on therole of …financial intermediaries in business cycle activity states that lending activity is characterized byasymmetric information between borrowers and lenders. Unlike other...

This note investigates the effects of introducing a transaction tax ondepth and bid-ask spread using a static model where a competitive market makerfaces informed and liquidity traders. When the degree of information asymmetryis low, an increase in the transaction tax can result into a smaller...