In framing monetary policy, the Federal Reserve should go beyond its dual mandate to promote maximum employment and price stability, and formally recognize financial stability as the third leg of its mandate, according to a new research paper by Wharton experts. “The financial sector is absolutely crucial to the transmission of monetary policy; you can’t have a healthy, successful economy with a financial sector that doesn’t work,” said Joao Gomes, Wharton professor of finance and economics. Gomes co-authored the paper, titled “Monetary Policy and Financial Stability,” with Sergey Sarkisyan, a doctoral candidate in ... (full story)