Graduation Year

Spring 2013

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts



Reader 1

Cameron Shelton

Rights Information

© 2013 Philip A. Brady


This is a substantially revised version of an earlier paper with the same title written by co-authors Mark Gertler and Simon Gilchrist written in 1994. The goal of this paper is to further understand the importance of financial propagation mechanisms for aggregate behavior and build upon their results. A large portion of economic research on the topic has concluded, with convincing evidence, that credit market frictions may influence business cycles, as well as the direction of changes to monetary policy moving forwards. It also shows that the change in business cycle behavior should be evident across all firms, with the level of effect being dependent on access to credit markets. Because of these conclusions, this paper will look to explore the differences in behavior between small firms and large firms regarding their sales, inventory, and short-term debt.

This thesis is restricted to the Claremont Colleges current faculty, students, and staff.