In the aftermath of the 2008 financial crisis, eminent economist, Raghuram Rajan, examines persisting policy failures in world economics in this book.
Summary Of The Book
In 2005, Rajan presented a paper which expressed concerns over the international financial situation which was becoming increasingly risky. At that time, his ideas were categorically dismissed for being misguided. However, in less than three years, the US financial crisis came about which confirmed Rajan’s views, reinstating his prescience on world economics. In Fault Lines, Rajan reviews the ongoing developments in the world of finance and pinpoints problems that have persisted even after the meltdown.
Rajan states that in the present day economic structure, which is more integrated than ever before, the decisions of one institution would not only affect its own future but also the future of the entire economy. However, these fault lines are not a consequence of economics alone, they are in fact, driven more by politics. In this book, Rajan has tried to identify specific policy choices that world leaders need to make in order to avert future crises of such magnitude.
He retraces the roots of the crisis back to early 90s in the hope of understanding when and where various policies failed. In this, he focuses on leading world economies that had a major role to play in the build-up to the financial meltdown. He brings out their internal political pressures, their trade imbalances, and the resulting effects on international financial institutions.
About Raghuram G. Rajan
Raghuram G. Rajan is an eminent Indian economist. He is the Chief Economic Adviser to the Government of India.
He co-authored Saving Capitalism from the Capitalists with his fellow professor Luigi Zingales in 2004. His articles have appeared in leading journals including American Economic Review, Journal of Political Economy, and Oxford Review of Economic Policy.
His take on world economics is held as insightful and daring. He advocates supply-side improvements as a means to achieve economic stability. His views are based on well-established theoretical frameworks and counter prevalent opinions in the world of finance.
Rajan was born in 1963 in a Tamil family living in Bhopal. He received his PGD in business administration from the Indian Institute of Management, Ahmedabad and a PhD in management from MIT. He is currently the Eric J. Gleacher Distinguished Service Professor of Finance at the Booth School of Business at the University of Chicago. He has previously served as the president of American Finance Association and the chief economist of IMF.