Raghuram Rajan
Encyclopedia
Raghuram Govind Rajan(born 3 February 1963) is currently the Eric J. Gleacher Distinguished Service Professor of Finance at the Booth School of Business at the University of Chicago
. He is also an honorary economic adviser to Prime Minister of India
Manmohan Singh
(appointed 2008.) and the current President of the American Finance Association
. He previously was the chief economist of the International Monetary Fund
(IMF) and headed a committee appointed by the Planning Commission on financial reforms in India.
Rajan is also a visiting professor a for the Indian Finance Ministry
, World Bank
, Federal Reserve Board, and Swedish Parliamentary Commission.
in 1987. He received his PhD
in Economics
from the Massachusetts Institute of Technology
(MIT) in 1991 with a thesis entitled "Essays on Banking."
.
He was the "Economic Counselor and Director of Research" (Chief Economist) at the International Monetary Fund
from September 2003 until January 2007. In 2003, he was also the inaugural recipient of the Fischer Black Prize awarded by the American Finance Association for contributions to the theory and practice of finance by an economist under age 40.
In 2005, at a celebration honoring Alan Greenspan
, who was about to retire as chairman of the U.S. Federal Reserve, Rajan delivered a controversial paper that was critical of the financial sector. In that paper, "Has Financial Development Made the World Riskier?", Rajan "argued that disaster might loom." Rajan argued that financial sector managers were encouraged to
Thus Rajan described the 2007-2008 collapse of the world's financial system.
The response to Rajan's paper at the time was negative. For example, former U.S. Treasury Secretary and former Harvard President Lawrence Summers
called the warnings “misguided.”
In April 2009, Rajan penned a guest column for The Economist, in which he proposed a regulatory system that might minimize boom-bust financial cycles.
In 2010, he was named by Foreign Policy
magazine to its list of top global thinkers. In a poll in The Economist
, Rajan ranked first as the economist with the most important ideas in the post-financial crisis world.
University of Chicago
The University of Chicago is a private research university in Chicago, Illinois, USA. It was founded by the American Baptist Education Society with a donation from oil magnate and philanthropist John D. Rockefeller and incorporated in 1890...
. He is also an honorary economic adviser to Prime Minister of India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
Manmohan Singh
Manmohan Singh
Manmohan Singh is the 13th and current Prime Minister of India. He is the only Prime Minister since Jawaharlal Nehru to return to power after completing a full five-year term. A Sikh, he is the first non-Hindu to occupy the office. Singh is also the 7th Prime Minister belonging to the Indian...
(appointed 2008.) and the current President of the American Finance Association
American Finance Association
The American Finance Association is an academic organization whose focus is the study and promotion of knowledge of financial economics. It was formed in 1939...
. He previously was the chief economist of the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
(IMF) and headed a committee appointed by the Planning Commission on financial reforms in India.
Rajan is also a visiting professor a for the Indian Finance Ministry
Ministry of Finance (India)
The Ministry of Finance is an important ministry within the Government of India. It concerns itself with taxation, financial legislation, financial institutions, capital markets, center and state finances, and the Union Budget....
, World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
, Federal Reserve Board, and Swedish Parliamentary Commission.
Early life
Raghuram Rajan was born in Bhopal. In 1985, he graduated from the Indian Institute of Technology, Delhi, with a bachelor's degree in Electrical Engineering; he completed the Master of Business Administration at the Indian Institute of Management, AhmedabadIndian Institute of Management Ahmedabad
The Indian Institute of Management Ahmedabad , better known as IIM Ahmedabad or simply IIM-A, is a business school located in Ahmedabad, Gujarat, India. It is the second Indian Institute of Management to be established, in 1961.-History:...
in 1987. He received his PhD
Doctor of Philosophy
Doctor of Philosophy, abbreviated as Ph.D., PhD, D.Phil., or DPhil , in English-speaking countries, is a postgraduate academic degree awarded by universities...
in Economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
from the Massachusetts Institute of Technology
Massachusetts Institute of Technology
The Massachusetts Institute of Technology is a private research university located in Cambridge, Massachusetts. MIT has five schools and one college, containing a total of 32 academic departments, with a strong emphasis on scientific and technological education and research.Founded in 1861 in...
(MIT) in 1991 with a thesis entitled "Essays on Banking."
Career
After graduation, Rajan joined the Booth School of Business at the University of ChicagoUniversity of Chicago
The University of Chicago is a private research university in Chicago, Illinois, USA. It was founded by the American Baptist Education Society with a donation from oil magnate and philanthropist John D. Rockefeller and incorporated in 1890...
.
He was the "Economic Counselor and Director of Research" (Chief Economist) at the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
from September 2003 until January 2007. In 2003, he was also the inaugural recipient of the Fischer Black Prize awarded by the American Finance Association for contributions to the theory and practice of finance by an economist under age 40.
In 2005, at a celebration honoring Alan Greenspan
Alan Greenspan
Alan Greenspan is an American economist who served as Chairman of the Federal Reserve of the United States from 1987 to 2006. He currently works as a private advisor and provides consulting for firms through his company, Greenspan Associates LLC...
, who was about to retire as chairman of the U.S. Federal Reserve, Rajan delivered a controversial paper that was critical of the financial sector. In that paper, "Has Financial Development Made the World Riskier?", Rajan "argued that disaster might loom." Rajan argued that financial sector managers were encouraged to
(take) risks that generate severe adverse consequences with small probability but, in return, offer generous compensation the rest of the time. These risks are known as tail risks.[...] But perhaps the most important concern is whether banks will be able to provide liquidity to financial markets so that if the tail risk does materialize, financial positions can be unwound and losses allocated so that the consequences to the real economy are minimized.
Thus Rajan described the 2007-2008 collapse of the world's financial system.
The response to Rajan's paper at the time was negative. For example, former U.S. Treasury Secretary and former Harvard President Lawrence Summers
Lawrence Summers
Lawrence Henry Summers is an American economist. He served as the 71st United States Secretary of the Treasury from 1999 to 2001 under President Bill Clinton. He was Director of the White House United States National Economic Council for President Barack Obama until November 2010.Summers is the...
called the warnings “misguided.”
In April 2009, Rajan penned a guest column for The Economist, in which he proposed a regulatory system that might minimize boom-bust financial cycles.
In 2010, he was named by Foreign Policy
Foreign Policy
Foreign Policy is a bimonthly American magazine founded in 1970 by Samuel P. Huntington and Warren Demian Manshel.Originally, the magazine was a quarterly...
magazine to its list of top global thinkers. In a poll in The Economist
The Economist
The Economist is an English-language weekly news and international affairs publication owned by The Economist Newspaper Ltd. and edited in offices in the City of Westminster, London, England. Continuous publication began under founder James Wilson in September 1843...
, Rajan ranked first as the economist with the most important ideas in the post-financial crisis world.
Publications
- Saving Capitalism from the CapitalistsSaving Capitalism from the CapitalistsSaving Capitalism from the Capitalists is a non-fiction book by Raghuram Rajan and Luigi Zingales of the University of Chicago Booth School of Business. The full title of the book is: Saving Capitalism from the Capitalists: Unleashing the Power of Financial Markets to Create Wealth and Spread...
, was co-authored with fellow Chicago Booth professor Luigi ZingalesLuigi ZingalesLuigi G. Zingales is the Robert C. McCormack professor of Entrepreneurship and Finance at the University of Chicago Booth School of Business. Zingales also serves as a member of the Committee on Capital Markets Regulation....
and published in 2004. - Fault Lines: How Hidden Fractures Still Threaten the World Economy, published in 2010, has won the Financial Times and Goldman Sachs Business Book of the Year Award for 2010.
- He has also published numerous articles in top-tier finance and economics journals including the American Economic ReviewAmerican Economic ReviewThe American Economic Review is a peer-reviewed academic journal of economics publishing seven issues annually by the American Economic Association. First published in 1911, it is considered one of the most prestigious journals in the field. The current editor-in-chief is Penny Goldberg . The...
, Journal of Economic PerspectivesJournal of Economic PerspectivesThe Journal of Economic Perspectives is an economic journal published by the American Economic Association. The journal is very broad in its scope...
, Journal of Political EconomyJournal of Political EconomyThe Journal of Political Economy is an academic journal run by economists at the University of Chicago and published every two months by the University of Chicago Press. The journal publishes articles in both theoretical economics and empirical economics...
, Journal of Financial EconomicsJournal of Financial EconomicsThe Journal of Financial Economics or JFE, is a peer-reviewed academic journal covering the theory of financial economics. Together with the Journal of Finance and the Review of Financial Studies, it is considered to be among the top three finance journal. The editor is Bill Schwert...
, Journal of FinanceJournal of FinanceThe Journal of Finance is a peer-reviewed academic journal published by Wiley-Blackwell on behalf of the American Finance Association. It was established in 1946. Its current editors are Campbell R. Harvey and John R. Graham...
and Oxford Review of Economic Policy.