Kopi time with Taimur Baig, E08: Former IMF chief economist and RBI governor, Prof Raghuram Rajan
In this podcast, I discuss a wide range of conjunctural topics with Professor Raghuram Rajan, a foremost global authority on central banking, financial markets, and economic development.
Prof Rajan begins by underscoring the high degree of uncertainty around economic forecasts and major risks weighing on financial markets. He shares with us his take on the impact of Covid-19 on developed economies, where there are early signs of curve flattening. His key concern is countries like India, characterised by not only weak economic fundamentals, but also weak administrative machinery and inadequate public health coverage. (See his article with Nobel laureates Abhijit Banerjee and Amartya Sen on this topic here)
On fiscal and monetary policy measures, Prof Rajan supports strong and innovative life-line measures for those most affected by the crisis, but he is not in favour of support for all, especially in advanced economies that have strong bankruptcy processes in place. He also talks about this crisis as a window for banks to redeem themselves after the missteps around the 2008/09 financial crisis.
Dr. Rajan has just been named a member of the IMF’s external advisory group. He talks about how he would advocate more liquidity support measure for EMs, as well as special temporary swap-like IMF financing facilities to supplement what the US Fed has been doing.
In his recent book “The Third Pillar—how markets and the state leave the community behind,” Prof Rajan calls for local communities to be empowered further. Here he contextualises the role of communities in health and education, particularly relevant at times like this.
We end with some hope that at the G20 and G7 levels, despite a lack of US leadership, the world is coming together to take coordinated actions to combat Covid-19 and its economic damage.
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