Jackson Hole Symposium: When Indians Rocked The Coveted Annual Economic Summit

The US Federal Reserve Bank of Kansas City hosts a prestigious economic symposium every year, drawing central bankers, policy makers, economists, academicians, and market participants. Widely regarded as one of the most influential global economic events, the symposium often provides major policy signals.

The Jackson Hole Economic Policy Symposium is highly selective with regard to participation, but the hosts ensure global representation as it chooses topics that are not only relevant to the US, but also to other world economies.

The presence of India's Central bankers and economists to the high-value economic event at Wyoming has been rare, but notable. The most memorable instance was when former RBI governor Raghuram Rajan warned the world about a potential economic crisis nearly two decades ago.

Raghuram Rajan had created a stir in 2005 at the prestigious gathering of Central bankers by pointing at simmering risks in the global financial landscape.

Rajan, then chief economist at the International Monetary Fund, presented his landmark paper 'Has Financial Development Made the World Riskier?' However, his warnings drew little attention. According to Wikipedia, former US Treasury Secretary Lawrence Summers called them "misguided".

In 2024, in an interview to Econ Focus, published by the US Fed Bank of Richmond, Rajan recalled, "The press thought I was a little bit of a crackpot."

Two years down the line when economies were grappling with a global economic crisis, Rajan's warnings delivered at Jacksone Hole proved prescient.

Rajan was later extensively interviewed for the Academy-Award winning documentary Inside Job. This event paved the way for Rajan to contribute to the development of the Indian economy and monetary policy management.

Viral V Acharya, a former Deputy Governor of RBI, attended the Jackson Hole Symposium in August 2022. He presented a paper on 'Liquidity Dependence: Why Shrinking Central Bank Balance Sheets is an Uphill Task'. He worked on this paper with economists Rahul S Chauhan and Raghuram Rajan, and German economist Sascha Steffan.

The paper highlighted the relationship between Central bank balance sheet expansion and economic fragility. It argued that the Central bank actions have significant effect on balance sheets and systematic liquidity.

This year, the symposium's theme is 'Labor Market Transition: Demographics, Productivity and Macroeconomic Policy'.

Labour markets are going through structural changes due to long-standing trends such as declining birth rate, aging labour force, reduced labour mobility and rise of artificial intelligence, according to information available on Kansas City Fed's website.

The event is scheduled to be held from Aug. 21 to Aug. 23. Market participants are keenly awaiting US Fed Chair Jerome Powell's speech, due later today for fresh cues on policy outlook.