Lord Raj Bagri Professor of Economics, London Business School
Hélène Rey is Professor of Economics at the London Business School. Her ground-breaking work on the organisation of the international monetary system and the theory of financial crises combines empirical analysis and applied economic theory. “The economist to watch in 2016”, as The Economist named her, Hélène Rey is changing her discipline by reimagining established theories and changing long-established paradigms.
BREAKING THE WALL OF GLOBAL ECONOMIC CRISES. How Macroeconomics Shape the Financial Architecture of Tomorrow
Sometimes, the reason for a paradigm shift can seem completely obvious after it has been discovered. One wonders how the previously held notion could have been resistant to change for so long. A field that does not lack bold assertions followed by major shifts is economics. The most recent financial crises and the Great Recession have raised doubts about the sanity of the system, its instruments and its regulations, highlighting the need for a deeper understanding of the underlying forces that affect the financial world. Hélène Rey, Professor at the London Business School and “the economist to watch in 2016” (The Economist), does not shy away from the big issues in her field. She is a Macroeconomist with a capital M and has been turning heads regularly now, challenging decades-old assumptions about national monetary systems, international financial sovereignty and global financial cycles. One of her most prominent and provocative contributions was to challenge the conventional wisdom that nations can only achieve two elements of the “impossible trinity”: a fixed exchange rate, an open capital market without capital controls, and an independent monetary policy. In an influential speech given to central bankers at the Jackson Hole Symposium, Wyoming, Hélène argued that in the context of a globalised mesh of financial flows with the US as a powerful centre, the theory has become obsolete. Instead of the long-standing “trilemma”, today’s financial world faces a simple dilemma – countries can only achieve an independent monetary policy if they take some control over capital flows. At Falling Walls, Hélène discusses how our hyperglobalised world has changed perspectives on national and global economies and how this knowledge can help us prevent the next financial crises.