Raghuram Rajan Quotes
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In emerging markets, slow growth in the advanced economies has shut down a traditional development path: export-led growth. As a result, emerging markets have had to rely once again on domestic demand. This is always a difficult task, given the temptation to over-stimulate.
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In a world with weak aggregate demand, countries are engaging in a futile competition for a greater share of it. In the process, they are creating financial-sector and cross-border risks that will become increasingly apparent as countries exit their unconventional policies.
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The first step to prescribing the right medicine is to recognize the cause of the illness. And, when it comes to what is ailing the global economy, extreme monetary easing has been more cause than cure. The sooner we recognize that, the stronger and more sustainable the global economic recovery will be.
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Perhaps the hardest challenge has been to persuade the public, impatient for rapid growth, of the need to ensure stability first. Growth, it is argued, is always more important, regardless of the looming economic risks.
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By killing transparency and competition, crony capitalism is harmful to free enterprise, opportunity, and economic growth. And by substituting special interests for the public interest, it is harmful to democratic expression.
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If developed countries' citizens want to feel slightly better about their economies' slow growth and high unemployment, they should contemplate how much worse matters could be without the institutions that they have.
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The problem with forbearance is that it always looks like a good thing to do until it stops working.
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The government will always tell you that it wants low inflation. The real issue is the horizon over which to bring inflation down.
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The difficulty in a number of Western democracies is that the playing field is being tilted. For many in the middle class, prosperity seems unattainable because a good education - today's passport to riches - is unaffordable.
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Too many years away from academia renders you pretty incompetent at research and teaching. So I had to go back.
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Politicians know that structural reforms - to increase competition, foster innovation, and drive institutional change - are the way to tackle structural impediments to growth. But they know that while the pain from reform is immediate, gains are typically delayed and their beneficiaries uncertain.
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Competition is like a treadmill. If you stand still, you get swept off. But when you run, you can never really get ahead of the treadmill and cover new terrain - so you never run faster than the speed that is set.
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Ultimately, in the long run we need to immunise our system from being overly responsive to fluctuations in the exchange rate; that is, people should, by and large, be reasonably hedged, or they should borrow more in domestic currency rather than foreign currency.
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I think we have still to get to a place where we feel satisfied. We have this saying - 'In the land of the blind, the one-eyed man is king'. We are a little bit that way.
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Endorsing unconventional monetary policies unquestioningly is tantamount to saying that it is acceptable to distort asset prices if there are other domestic constraints on growth.
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The idea was never for me to be a career bureaucrat or career technocrat; it was more about where I could implement ideas and reform programs.
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I am not a 'doom and gloom' guy.
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It is the central bank governor, unlike other regulators or government secretaries, who has command over significant policy levers and has to occasionally disagree with the most powerful people in the country.
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Monetary policy is like juggling six balls... it is not 'interest rate up, interest rate down.' There is the exchange rate, there are long term yields, there are short term yields, there is credit growth.
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In India, we say one thing, and we do something else.
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One of the difficulties of a job in the, quote, 'real world' is you don't really get time to shut yourself off in a room and think.
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I am an academic, and I have always made it clear that my ultimate home is in the realm of ideas.
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If anybody was to look towards a big source of demand in future, it would be hard for them to miss India.
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I will say this: the central banks can actually support growth beyond a point. When there is no inflation, they can cut interest rates, and that is the way they support growth, but if you cut interest rate to the bone, there is nothing more to cut. It is very hard to support growth beyond that.