One Economics

One Economics, Many Recipes Dani Rodrik Sir Arthur Lewis Distinguished Lecture March 26, 2009

Has (neo-classical) economics failed us? ,[object Object],[object Object],[object Object],[object Object]

Countries that have performed the best in recent times are countries with “non-standard” policies: *The index is a composite quantitative measure of “the 10 key ingredients of economic freedom such as low tax rates, tariffs, regulation, and government intervention, as well as strong property rights, open capital markets, and monetary stability.”

Capital flows have gone in the wrong direction …

Capital flows have not promoted risk diversification and consumption smoothing … Source: Kose et al. (2007)

Capital flows have been associated with frequent and painful financial crises … Source: Jeanne and Ranciere (2005)

… which in turn have forced developing nations to engage in costly self-insurance strategies

The resulting “saving glut” was a key determinant of the current crisis: ,[object Object],-- Ben Bernanke (2009)

The fundamental problem ,[object Object],[object Object],[object Object],[object Object],[object Object]

Two policy mindsets ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Why the Washington Consensus failed (I) ,[object Object],[object Object],[object Object]

Why the Washington Consensus failed (II) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Why the Washington Consensus failed (III)

Why did financial globalization fail? (I) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

A tale of financial innovation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Who or what is the culprit? (1) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Who or what is the culprit? (2)

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Why did financial globalization fail? (II)

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Why did financial globalization fail? (III)

Undervaluation is good for growth

Net foreign borrowing is bad for growth Period covered is 1970-2000. Source: Prasad, Rajan, and Subramanian (2006)

Recap ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Questions each group should ask: ,[object Object],[object Object],[object Object],[object Object]

Concluding remarks ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

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