Finance: Research, Policy and Anecdotes

There used to be a time when academic economists wrote books.  Considering the finance and development literature, the original wave of works consisted exclusively of books – Shaw (1967), Goldsmith (1969),  McKinnon (1973), Fry (1988). On the other hand, when I was in the PhD programme in the late 1990s, my PhD supervisor told me in very clear terms that the only way to make a career in academia was to write papers publishable in top journals. And a paper should focus on one idea; put differently, if you have two good ideas, write two good papers.   And that seemed to have been the consensus in our profession for many years. Recently, however, (and all of this is based purely on anecdotal not statistical evidence), there seems to be a resurgence of books in our profession.    Books allow a broader view on a topic rather than focusing on one (sometimes narrow) idea in a theoretical model or empirical specification.  It also allows reaching a broader audience with potentially a bigger impact on the public discourse.  It often also provides a broader overview of the literature in a specific area.  Among my favourite examples are Ragu Rajan and Luigi Zingales’ book on “Saving Capitalism from the Capitalists” (a point that should be made over and over again in the public policy discourse) and Ragu’s book on “Fault Lines” on the ongoing fragility in the global financial system.  Charlie and Steve Haber provide an excellent historical perspective on why financial sector policies can never be understood without analysing the political framework, which shapes them in "Fragile by Design".  And Carmen Reinhart and Kenneth Rogoff's  "This Time is Different" was not only published with perfect timing in 2009, but – one can only hope – will not be forgotten so quickly. 

What does this imply for young ambitious economists?  The above mentioned advice by my own supervisor certainly still holds – one can only get the big picture, after one has collected all the small pieces (almost like in a puzzle) - so the focus on high quality papers is still the most important first step in the career of young economists. But maybe there is a different longer-term objective these days, a stronger focus on the big picture, at least in the long-run.

Overview