For my research thesis, I am working on DSGE model with financial friction of Bernanke et al. (1999) and i want to add the banking sector (bank block) to this model. Is it theoretically possible to incorporate the ‘bank block’ of Gerali et al (2010) to the model of Bernanke et al (1999) ?
I would appreciate if anyone could recommend any research work that has addressed this extension of the model Bernanke et al (1999).
Thank you in advance.
I don’t really see any issue here. You would simply be putting an intermediary between households and firms.