Stephen S Roach

Articles By Stephen S Roach

63 Articles

Rate action: The Fed must think creatively again

By fixating on the risks of a Japanese-style deflation, the Fed all but ignored the possibility of a major upside inflation surprise

The challenge comes with normalisation—restoring monetary policy to pre-crisis settings. And for both the conventional benchmark policy interest rate and the unconventional balance sheet, the Fed has yet to figure this out.

Connecting the dots in China

The dual thrust of Chinese policy—redistribution plus re-regulation—will subdue the entrepreneurial activity that has been powering China’s dynamic private sector

China Flag

What to make of China’s animal spirits deficit

Modern China lacks the foundation of trust in consistent leadership priorities and transparent governance that underpins animal spirits

Ma’s ill-timed comments at a Shanghai financial forum in late October 2020 about the “pawnshop” mentality of the bank-centric Chinese financial system crossed the line for China’s leaders.

Boxed in on China

The Biden administration needs to abandon the unworkable bilateral framework of the phase one deal and the tariffs that support it

Lacking domestic savings, the US borrows surplus saving from abroad in order to invest and grow.

The limits to the US’s pent up demand

Recent trends in US consumer spending suggest that the natural forces of pent-up demand may largely be spent

That’s what the numbers show. Unlike the powerful rebound of consumer spending on durables, the post-lockdown rebound of services from May to December 2020 recouped just 63% of what was lost during March and April.

The internet versus democracy

The problem, of course, lies in internet governance—namely, the absence of rules. The virtues of cyber-libertarianism have become inseparable from its vices

The internet’s open architecture has long been extolled by cyber-libertarian futurists as a powerful new democratising force.

Recovery or relapse? The pandemic’s long economic shadow

The double dip of early 2021 will be a painful reminder of the lingering vulnerability of the US business cycle in the aftermath of a major recessionary shock

Extraordinary damage was done by last spring’s lockdown. Now, a second and more horrific wave of the coronavirus is at hand—not dissimilar to the course of the 1918-20 influenza outbreak.

Recovery outlook: A tale of two economies

As market celebrate the coming vaccine-led bloom, epidemiological and political aftershocks have pushed the US back into heightened economic vulnerability

Indian economy, covid vaccine

The vise tightens on the dollar

Negative net domestic savings in the US and a soaring current-account deficit will weaken the dollar quite fast

remittances, NRI, bank deposits, bank savings,

America’s coming double dip

Soaring financial markets are blithely indifferent to lingering vulnerabilities in the US economy. But the impact of consumers’ fear of Covid-19 on pandemic-sensitive services is unlikely to subside, undermining the case fo

US economy, US business cycle, v shaped recovery, global financial crisis, pre-Covid-19 level,financial markets

From American to European exceptionalism: Unlike the US, Europe has risen to opportunities presented by COVID-19 crisis

As the world’s most unloved major currency, € may well be headed for an exceptional run of its own. Downward pressure on $ will only intensify as a result

Whereas the International Monetary Fund expects the US current-account deficit to hit 2.6% of GDP in 2020, the EU is expected to run a current-account surplus of 2.7% of GDP—a differential of 5.3 percentage points.

Covid-19: Hyper-extended saving, current-account imbalances will have consequences for dollar

No country can afford to squander its saving potential—ultimately, the seed-corn of long-term economic growth. That’s true even of the United States, where the laws of economics have often been ignored under the guise of

Coronavirus hits China’s growth: Economic response to farlag the virus infection curve

The economic response to COVID-19 will far lag the virus infection curve.

coronavirus, coronavirus outbreak

A global economy without a cushion: World staring at a recession?

Global growth moving into the lower half of the 2.5-3.5% range leaves the world more susceptible to a recession.

The economic crisis of 2020: Financial market imbalances point to vulnerability

The best that economists can do is to assess vulnerability. Looking at imbalances in the financial markets gives a sense of the potential consequences of a major shock

Politics of US-China trade war point toward de-escalation

A recent IMF study found that GVCs accounted for fully 73% of the rapid growth in global trade that occurred over the 20-year period from 1993 to 2013.

Tariff wars: No art to the US-China trade deal

Multilateral problems require solutions aimed at the macroeconomic imbalances on which they rest. That could mean a reciprocal market-opening framework

For years, China has embraced the “fat-wallet” approach when it comes to defusing trade tensions with the US. (Representational image)

China’s visionary economic policy: The country is less concerned about sudden growth accidents

In 2018, net exports were just 0.8% of China’s GDP, which represents a dramatic compression from a decade earlier, when net exports accounted for a full 7.5% of real GDP. While hardly an oasis in a weakening global economy,

china, china economy, US tariff war, China-US tariff war, global financial crisis, Donald Trump, economy news, world economy, singapore, china, export, china export, Gross domestic product, economy news

What is common in China and Japan? Both are victims of US trade war

Japan and China both became victims of America’s unfortunate habit of making others the scapegoat for its own economic problems

China, Japan, US trade war, Ronald Reagan, US trade deficits, GDP,  World Trade Organization, global supply chains, US economy, donald trump

No middle-income trap for China, shift in output from quantity to quality

Productivity growth is far more important than GDP growth in determining a country’s development prospects

Chinese economic growth, china, china economy, china gdp, China Development Forum, beijing, china middle-income trap

US-China trade war: With ample policy space to address trade slowdown, China has no need to abandon long-term strategy

Chinese policymakers have moved aggressively to avoid the dreaded Japan syndrome—not just a debt overhang, but also a profusion of zombie companies and related productivity challenges.

US Monetary Policy: The Fed should be congratulated for its steadfast commitment to policy normalisation

From bubble to bubble, from crisis to crisis, there were increasingly compelling reasons to question the Fed’s stewardship of the US economy.

dollar, dollar value, US stocks, US stock market, united States, wall street, currencies, market news

The internationalisation of inflation: Assess risk factors of domestic output gaps to global output gaps

Understanding inflation now requires the broadening of the assessment of risk factors of domestic output gaps to global output gaps

internationalisation of inflation, risk factors, domestic output gaps, global output gaps, consumer price index

Ending US-China economic war: Yale professor & former Morgan Stanley Asia chairman suggests this

Transforming a zero-sum conflict of codependency into a positive-sum relationship of mutually beneficial interdependence is the only way to end this economic war.

us, china, economy

Trade tensions: The current account is what counts

America’s trade gaps have, in fact, been spawned by a chronic deficiency of domestic US saving, averaging just 1.9% over the 2009-17 period.

QE lessons on its 10th anniversary

The taper tantrum of 2013 and the current travails of EMEs underscore the contagion of cross-market spillovers arising from QE

When power politics overcome economic rationale

The us president’s fiscal and trade policies show no appreciation of the linkage between trade deficits and macroeconomic saving-investment imbalances.

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