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: September 2017

ISBN: 9780881327199

170 Pages

Format: Paperback

List Price: $23.95£19.95

The Paradox of Risk

Leaving the Monetary Policy Comfort Zone

Ángel Ubide

Peterson Institute for International Economics

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For decades, economic policymakers have worshipped at the altar of combating inflation, reducing public deficits, and discouraging risky behavior by investors. That mindset made them hesitate when the global financial crisis erupted in 2007–08. In the face of the worst economic disaster in 75 years, they often worried excessively about the risks and possible losses from their actions, rather than moving forcefully to support financial institutions, governments and people. Ángel Ubide’s provocative thesis in Paradox of Risk is that central banks’ fear of inflation and risk taking has hampered their efforts to revive global prosperity. In their confusion, he argues, policymakers made the recovery weaker. He calls on world leaders to abandon old shibboleths and learn the lessons from the financial crisis and its sluggish aftermath. Ubide mobilizes a wealth of research on the experience from the last decade, urging policymakers to leave their "comfort zone," embrace risk taking, and take bolder action to brighten the world’s economic prospects.

About the Author

Ángel Ubide is a managing director at Goldman Sachs and former senior fellow at the Peterson Institute for International Economics.