The Paradox of Risk

Leaving the Monetary Policy Comfort Zone

Ángel Ubide

Peterson Institute for International Economics

The Paradox of Risk

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Pub Date: November 2017

ISBN: 9780881327199

170 Pages

Format: Paperback

List Price: $23.95£20.00

The Paradox of Risk

Leaving the Monetary Policy Comfort Zone

Ángel Ubide

Peterson Institute for International Economics

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In the decades before the global financial crisis struck in 2007, economic policymakers kept to the primary goal of containing inflation and public deficits. Today, after years of sluggish economic recovery, the time has come for that prevailing consensus to give way to a new strategy of monetary stimulus to spur economic growth and encourage risk-taking by investors. In this book, Ángel Ubide surveys the actions taken by central banks after the crisis and draws lessons from the unpredictable interaction of markets, countries, and financial institutions. He concludes that fear of another crippling crisis has caused central banks to become dangerously risk-averse and overly complacent about dampened economic growth. He advances the provocative thesis that monetary policymakers, accustomed to a "boring" role in managing economies, must now leave their "comfort zone" and embrace risk as a necessary requirement for growth.

About the Author

Ángel Ubide, senior fellow at the Peterson Institute for International Economics from 2009 to February 2016, is an expert on central banking, European affairs, finance, and macroeconomic policy. Ubide has worked for a decade and a half in the hedge fund industry, first at Tudor Investment Corporation and later at D. E. Shaw Group. His recent work focuses on the dynamics of the global financial crisis, with special emphasis on the euro area outlook, and on monetary policy.