This paper develops a computable general equilibrium model in which endogenous agency costs can potentially alter business cycle dynamics. The model resembles the influential theoretical work of Ben Bernanke and Mark Gertler (1989). Two sources of shocks are considered: productivity shocks and monetary shocks. The model is parametrized to match key features of U.S. aggregate activity. The principal result of the analysis is that agency costs add very little to the basic business cycle dynamics. Copyright 1995 by Ohio State University Press.