NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The End of Alchemy: A Review Essay

Roger E.A. Farmer

NBER Working Paper No. 23156
Issued in February 2017
NBER Program(s):Economic Fluctuations and Growth, Monetary Economics, Political Economy

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.

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Document Object Identifier (DOI): 10.3386/w23156

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