Revisiting Jackson Hole lessons on finance

Rajan's prognosis of high unseen risks in 2005 research paper played out in 2008 crisis, trends that he outlined now being seen in India

- AMOL AGRAWAL

IN THE LAST days of August, leading economists and policymakers gather to attend the annual Jackson Hole economic policy symposium hosted by the Federal Reserve Bank of Kansas City. Unlike most economics conferences, Jackson Hole (JH) is widely quoted in the media. Financial markets keenly await the inaugural remarks by the chairperson of the Federal Reserve Board for monetary policy signals.

The 2025 edition is also notable as it marks the 20th anniversary of the 2005 symposium. Then Federal Reserve chair Alan Greenspan was retiring after a record 18 years. In the "Greenspan era", the US economy fared well despite facing several crises and Greenspan was credited for steering it. As such, the symposium was held to commemorate and discuss the "Greenspan era", recognised as a pragmatic mix of monetary and financial policies.

The Greenspan era also saw wide-scale development of financial markets. A research paper titled "Has Financial Development made the World Riskier?" was presented by Raghuram Rajan, then economic counsellor at the International Monetary Fund, in which he questioned whether the very development made the world riskier. Let us unpack Rajan's research for more clarity.