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Financial crises, limited asset market participation, and banks balance sheet constraints

Listed author(s):
  • Elton Beqiraj Elton
  • Di Bartolomeo Giovanni
  • Di Pietro Marco

Our paper focuses on the effects of financial imperfections. It considers the interaction between two kinds of imperfections in an otherwise standard medium--scale New Keynesian economy characterized by nominal price and wage frictions, habits and capital adjustment costs. The imperfection investigated are the long--run limited--asset market participation assumption and the banks' balance sheet constraints due to an agency problem between financial intermediaries and depositors. The key question of the chapter is if the simultaneous presence of both amplifies or mitigates the negative effects of a financial crises, i.e., if these are substitutes or complements for the downturn after the crisis.

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File URL: http://wp.comunite.it/data/wp_no_127_2016.pdf
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Paper provided by Department of Communication, University of Teramo in its series wp.comunite with number 00127.

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Date of creation: Nov 2016
Handle: RePEc:ter:wpaper:00127
Contact details of provider: Web page: http://wp.comunite.it/

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  3. Nicolas Petrosky-Nadeau & Etienne Wasmer, 2013. "The Cyclical Volatility of Labor Markets under Frictional Financial Markets," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(1), pages 193-221, January.
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  8. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, September.
  9. Giovanni Di Bartolomeo & Lorenza Rossi & Massimiliano Tancioni, 2009. "Monetary Policy, Rule-of-Thumb Consumers and External Habits: A G7 Comparison," Quaderni di Dipartimento 101, University of Pavia, Department of Economics and Quantitative Methods.
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  13. Rannenberg, Ansgar, 2012. "Asymmetric information in credit markets, bank leverage cycles and macroeconomic dynamics," Working Paper Series 1487, European Central Bank.
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  16. Wasmer, Etienne & Weil, Philippe, 2000. "The Macroeconomics of Labor and Credit Market Imperfections," IZA Discussion Papers 179, Institute for the Study of Labor (IZA).
  17. Giorgio Motta & Patrizio Tirelli, 2011. "Optimal Simple Monetary and Fiscal Rules under Limited Asset Market Participation," Working Papers 204, University of Milano-Bicocca, Department of Economics, revised Mar 2011.
  18. Gertler, Mark & Karadi, Peter, 2011. "A model of unconventional monetary policy," Journal of Monetary Economics, Elsevier, vol. 58(1), pages 17-34, January.
  19. Andrea Gerali & Stefano Neri & Luca Sessa & Federico M. Signoretti, 2010. "Credit and banking in a DSGE model of the euro area," Temi di discussione (Economic working papers) 740, Bank of Italy, Economic Research and International Relations Area.
  20. Giovanni Di Bartolomeo & Lorenza Rossi, 2005. "Efficacy of Monetary Policy and Limited Asset Market Participation," Macroeconomics 0508027, EconWPA.
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