Abstract
Financial and monetary policies are considered to be effective depending on the reaction of financial markets which are increasingly populated by households. In this article, from intertemporal settings, I derive a Financial Almost Ideal (FAI) Demand System and I estimate it by highlighting the determinants of both limited participation to financial markets and asset substitutability/complementarity in the allocating stage. Finally, the wealth elasticities provide some further insights on the low diffusion of the newer and more complex financial instruments across Italian households.
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