Financial crises, limited-asset market participation, and banks’ balance-sheet constraints
Our chapter contributes to the literature on financial crises by jointly considering the banks' balance sheet constraints with the limited--asset market participation (LAMP) assumption in an otherwise simple medium--scale New Keynesian economy. The assumption of limited participation in the asset markets and its implications for policies are investigated in, e.g., Galì et al. (2007), Di Bartolomeo and Rossi (2007a, 2007b), Bilbiie (2008), Colciago (2011), Motta and Tirelli (2012, 2015), and Albonico et al. (2015).