As the IMF knows only too well, groupthink played a key role in policymakers’ inability to spot the risk of a major financial crisis. Could it be that globalisation contributed to this rise of groupthink? Central Bank of Ireland governor Patrick Honohan thinks so.
Since the era of David Ricardo, most – though not all – economists have extolled the virtues of global trade.
Mr Honohan’s comments are far from a damning critique. But the central bank governor points out that globalisation can “turbo charge” booms and busts in small open economies such as Ireland’s. Why?