We extend the general equilibrium economy of Holmstrom and Tirole (1997) to optimal reporting of productive assets and examine when the accounting process can contribute to financial acceleration. Given a small change in aggregate capital stock, the economy may respond with large readjustments...

How should a firm measure a productive asset used as collateral in a credit agreement? To answer this question, we develop a model in which firms borrow funds subject to collateral constraints. We characterize the qualities of optimal asset measurements and analyze their interactions with...

How should a firm measure a productive asset used as collateral in a credit agreement? To answer this question, we develop a model in which firms borrow funds subject to collateral constraints. We characterize the qualities of optimal asset measurements and analyze their interactions with...