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  4. September 2018
  5. The End of Alchemy by Mervyn King: A Review Essay

The End of Alchemy by Mervyn King: A Review Essay

  • Roger E. A. Farmer
Journal of Economic Literature
vol. 56, no. 3, September 2018
(pp. 1102-18)
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Abstract

I review The End of Alchemy by Mervyn King, published by W.W. Norton and Company in 2016. I discuss King's proposed regulatory reform, the "Pawn Broker for All Seasons" (PFAS), and I compare it to an alternative solution developed in my own work. I argue that unregulated trade in the financial markets will not, in general, lead to Pareto optimal allocations. As a consequence, solutions like the PFAS that correct problems with existing institutions are likely to be circumvented by the development of new ones.

Citation

Farmer, Roger E A. 2018. "The End of Alchemy by Mervyn King: A Review Essay." Journal of Economic Literature, 56 (3): 1102-18. DOI: 10.1257/jel.20171445

Additional Materials

JEL Classification

  • D81 Criteria for Decision-Making under Risk and Uncertainty
  • D82 Asymmetric and Private Information; Mechanism Design
  • E44 Financial Markets and the Macroeconomy
  • G01 Financial Crises
  • G18 General Financial Markets: Government Policy and Regulation
  • G28 Financial Institutions and Services: Government Policy and Regulation
  • L51 Economics of Regulation