A call for an end to aggressive monetary policy and a return to smart
growth from an eminent researcher and former central banker.
Central banks took extraordinary measures to stabilize markets and
enhance growth after the financial crisis of 2008, but without giving
much thought to the long-term consequences. It was a response, Raghuram
Rajan argues, that set a dangerous precedent: the more centrals bank
did, the more they were expected to do, and the more they ended up
doing. Monetary Policy and Its Unintended Consequences looks back at
what this meant for where we are now.
A former central banker who foresaw the 2008 crisis and wrote a
bestselling book about the risks of excessively accommodative monetary
policy, Rajan takes a hard look at central bank behavior and its embrace
of increasingly aggressive strategies to keep economies afloat. Despite
efforts to strengthen markets, the 2020 pandemic showed economies remain
as vulnerable as ever to adverse shocks, prompting large-scale
interventions that, in the case of Covid, led to persistent inflation
and market volatility. By examining these undertheorized outcomes, Rajan
hopes central banks will recognize the unintended consequences of using
all of the instruments available to them, which will encourage them to
return to their core mandates of low inflation and financial stability.
Monetary Policy and Its Unintended Consequences is the most thorough
account yet of the choices central banks have made to meet the economic
challenges of our century and why they must rethink these choices.
