Shocks, Crises, and False Alarms

CHAPTER 1 Good Macro at Risk

In the past 40 years or so, a confluence of tailwinds delivered a benign business environment for corporate leaders and investors alike. In the financial sphere, high and volatile inflation declined to structurally low and stable levels, pulling interest rates down with it, and boosting the valuation of equities and other assets. In the real economy, the longevity of expansions grew, and profit margins widened. In international relations, a process of geopolitical convergence unfolded, giving rise to a web of institutional arrangements and stable global rules that made possible growing cross-border value chains and access to dynamic markets. Taken together, this environment encouraged business leaders to take ...