Financial Stability and the Role of the Financial Policy Committee

9 Pages Posted: 22 Aug 2014

See all articles by Roger E. A. Farmer

Roger E. A. Farmer

University of California, Los Angeles (UCLA) - Department of Economics; University of Warwick; National Institute of Economic and Social Research (NIESR); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Date Written: September 2014

Abstract

This paper distinguishes institutional from systemic explanations for the cause of financial instability. I argue that financial crises are systemic, and as a consequence, the maintenance of financial stability requires more than simple regulation of existing institutions. The newly created Financial Policy Committee of the Bank of England, should actively manage the asset portfolio of the Treasury, with the aim of stabilizing the price to earning (PE) ratio of a broad stock market index.

Suggested Citation

Farmer, Roger E.A., Financial Stability and the Role of the Financial Policy Committee (September 2014). The Manchester School, Vol. 82, pp. 35-43, 2014. Available at SSRN: https://ssrn.com/abstract=2484874 or http://dx.doi.org/10.1111/manc.12070

Roger E.A. Farmer (Contact Author)

University of California, Los Angeles (UCLA) - Department of Economics ( email )

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University of Warwick ( email )

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United Kingdom

HOME PAGE: http://Rogerfarmer.com

National Institute of Economic and Social Research (NIESR) ( email )

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HOME PAGE: http://NIESR.ac.uk

National Bureau of Economic Research (NBER)

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Centre for Economic Policy Research (CEPR)

London
United Kingdom

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