Monetary policy and stock price dynamics with limited asset market participation

► I study a New-Keynesian DSGE model with limited asset market participation (LAMP). ► If LAMP is significant, responding to stock prices facilitates equilibrium determinacy and learnability of REE. ► Otherwise, it is likely to induce aggregate instability, in the form of learnable sunspot equilibria. ► The results hold both under contemporaneous and forward-looking interest rate rules.