Monday 27 Jun 2022 | 12:18 | SYDNEY
People | experts Stephen Grenville
Nonresident Fellow
Lowy Institute
Areas of ExpertiseRegional economic integration; Australia's economic relations with East Asia; international financial flows and the global financial architecture; financial sector development in East Asia

Monetary policy: Where to now?

Central banks around the world had a couple of halcyon decades leading up to the global financial crisis, when growth was good and inflation was low. Since 2008 they have taken a lot of criticism. The Bank of England (BoE) illustrates the fall from grace. So great are the Bank's perceived failings

'Global Keynesianism': A solution for the world monetary policy bind

The major advanced economies have had very accommodative monetary policies since the 2008 global financial crisis. These 'flat to the floor' expansionary settings are likely to remain in place for some years to come, and there are positive and negative implications not only for their domestic

Greece, the IMF and the politics of prevarication

Financial markets heaved a sigh of relief last week when agreement was reached on the next stage of the Greek bail-out. But the key problem remains: Greece has an unsustainable debt burden. This problem has been kicked down the road yet again. The Greek rescue started badly. Even in May 2010, it

Competing trade deals test loyalties

President Obama's Asia visit has focused attention on two different and perhaps competing approaches to trade liberalisation: the ASEAN-centred Regional Comprehensive Economic Partnership (RCEP) and the US-sponsored Trans-Pacific Partnership (TPP). These proposals are the next generation in

Getting serious about IP and tax

Intellectual property rights are usually debated in terms of the balance between the rights of the user and the producer/owner. But there are also important implications for international taxation. With intellectual property forming such a large component of many products we buy, the nebulous

Keating on Indonesia

Bravo! We might have expected that Paul Keating would go beyond the anodyne in talking about the Asian Century. But when the Asian dialogue is dominated by China, it takes special panache to repeat the radical view he put forward as Prime Minister in 1994: 'no country is more important to Australia

Reforming the credit rating agencies

Australia rarely gets an opportunity to have any substantial role in the development of what Tom Friedman called the 'Golden Straitjacket': the rules and understandings that govern and support international economic integration. But a recent Australian court judgment may provide a modest

G20 finance meeting: Mexican stand-off

The G20 finance ministers' and central bank governors' meeting in Mexico last weekend provides some uncomfortable messages for Australia as hosts of the 2014 G20 meetings in Brisbane: unless it provides a forum for top-level policy makers to confront the vexed issues of current international

Asian Century: Life in the slipstream

What is there not to like about the White Paper on the Asian Century? It is above all a feel-good document: historically we have done well in our relationships with Asia; we have the advantage of proximity; a large component of our population is of Asian descent; we are well equipped with relevant

Will wiping the debt slate clean for Greece save the euro?

Financial markets are beginning to feel a little more relaxed about the future of the euro, but there is a critical missing element in the current policy discussion. With attention focused on Spain's larger-scale problems, it would be easy to forget that Greece is still on an unsustainable path,

Slower growth in China belies a new world of productivity opportunities

There is more gloom about world economic growth, both short- and longer term. The IMF forecast for this year and next has just been revised down yet again and there is a clear downside even to this glum outlook. Looking further ahead, veteran economist Robert Gordon explores the idea that the rise

One 'G' to rule the world?

The G20 Leaders' meeting started out in 2008 with some tangible successes, but the general consensus is that it has now lost its momentum. Can it be reinvigorated before Australia hosts the 2014 meeting in Brisbane? In 2008 there was a very real concern that the global financial crisis would

What if China slows?

There is a vigorous debate on the prospects for China's growth. But there is little disagreement that the 'new normal' for China is significantly slower than the 10%- growth of the past decade and that there needs to be a rebalancing over time, reducing the role of investment in driving growth. How

McKinsey on Indonesia

The Chinese economy attracts all the attention in the Asian Century, but Indonesia is right next to us, providing opportunities that are often more accessible and less crowded out by other foreigners. Thus a new McKinsey Report on Indonesia's economy provides a counterweight to the China obsession

Will QE fix the US economy?

As soon as Fed Chairman Bernanke announced a third round of \'quantitative easing\' (QE3), economic commentators reported it as another episode of \'money printing\', with newspapers illustrating the story with pictures of piles of currency. There is plenty of room for uncertainty about

G20: How many around the table?

The G20, the pre-eminent forum for global economic cooperation, has its share of detractors. Australia, as the 2014 host, will be in the thick of this criticism and needs to work out how to respond. Facing the urgency of the 2008 financial crisis, the G20 scored a couple of early successes,

Copyright is no Mickey Mouse issue

A California jury decision requires Samsung to pay Apple $1 billion for infringement of intellectual property and some of Samsung\'s products may have to be withdrawn. the decision will strengthen Apple\'s competitive position not just in America, but in all those countries which recognise

China growth is still sustainable

With the  European economy deeply mired and America facing both the \'fiscal cliff\' and the need to correct its budget deficit, the world has come to depend on China continuing to grow at a reasonable pace. China\'s own forecasts are for 7.5% growth, and the IMF agrees. Overshadowing these

America engaging China? Not always

US Assistant Secretary of State for East Asian and Pacific Affairs Kurt Campbell is quoted as saying that... ...\'no country has taken more trouble to engage with China\' than the US. If anything, the US had been giving China more responsibility in global affairs than it was comfortable with

Paul Ryan economic plan

With attention on Europe\'s economic mess, it would be easy to forget that America\'s intractable fiscal problem is coming to a head. The choice of Paul Ryan as Mitt Romney\'s running mate should bring this back into focus. The US budget challenge plays out over two different time horizons. First,

Deficit & surplus: IMF stern warning

In the years leading up to the 2008 global financial crisis, many commentators identified substantial current account deficits and surpluses as the main danger to the world economy. In particular, they worried about the US deficit and the Chinese surplus. As things turned out, neither of these

An agenda for the 2014 G20 in Brisbane

Australia will host the 2014 G20 meeting at a time when the usefulness of the G20 will be in question. We don\'t want this meeting to be a damp squib. How can we give it meaning? G20 began as a meeting of finance ministers and central bank governors in the aftermath of the series of crises

Financial sector reform: Whale watching

Efforts to make financial institutions small enough to manage have found some surprising supporters. When Sandy Weill said recently that he was in favour of breaking up conglomerate financial giants such as Citigroup, it looked like a major \'mea culpa\'. After all, he engineered the

Free trade: Untangling the noodles

The Doha Round of multilateral trade negotiations has fizzled out. The spate of preferential trade agreements (PTAs), misleadingly called \'free trade agreements\', has created a messy \'noodle bowl\' of overlapping and uncoordinated rules. A logical alternative strategy might start with a small

Democracy and Indonesia economy

Indonesia is getting good press, with fulsome praise for both the post-Soeharto democracy and the performance of the economy. There are some links between the two. Democratic performance is usually judged in terms of whether the elections went smoothly, whether the diversity of the

What did the European summit fix?

Financial markets responded positively to the European summit on 28-29 June, but how much progress was made? Before this crisis is over, there will be huge losses to be absorbed. These losses have already been incurred through poor bank lending and excessive government debt in countries without

Blame central banks? Not so fast

The halcyon days when central banks could do no wrong are long gone, and criticism of them is getting sharper. The harshest voice comes from The Economist (\'The Twilight of the Central Banker\'), taking to task the latest annual report of the central bankers\' club, the Bank for International

The future of international trade

For half a century the focus of international economic integration has been on reducing border restrictions to trade, mainly through tariff reductions. This task is not complete, but where there are substantial remaining barriers, as with agriculture, the domestic opposition is just too powerful.

Big finance takes refuge in complexity

Anyone who saw \'Inside Job\' would know that the 2008 global financial crisis (GFC) revealed fundamental deficiencies in the financial sector. With the lacklustre recovery in the US and Europe still deeply mired in the aftermath of 2008, you might think the climate would favour far-reaching

Commodity trade: Where the scrutiny?

Australia came through the 2008 global financial crisis in fine shape and has gone on growing at a good pace in a world where this is unusual, almost unique, for an advanced country. Even as commodity prices weaken, mining investment is running hot and profits are still growing quickly. You might

Inflation targeting under attack

Inflation targeting has been the lodestone for monetary policy in more than 25 central banks over the past couple of decades. But there are sceptics: can a policy which has the single objective of price stability cope with the threats to financial stability revealed by the 2008 global financial

Greece-euro: Descent into maelstrom

Clearly Greece has entered a new and perilous phase. Until now, the Greek crisis has been under control: grossly mishandled by policy-makers, but still able to be \'kicked down the road\' a bit further, putting off the denouement until another day. Each time the situation arrived at the point of no

Politics holding Indonesia back

With two of the three international credit rating agencies now ranking Indonesia as \'investment grade\', foreign investors (and foreign journalists) have noticed the \'good news\' story of the Indonesian economy. The story has actually been going on for more than a decade. Indonesia sailed through

Asia infrastructure deficit

Thanks to the strenuous efforts of US and European central banks to stimulate their moribund economies, government borrowing costs are historically very low. US ten-year bonds are paying less than 2%. At the same time, we know that much of South-East Asia is critically short of public infrastructure

Spinning a web with Indonesia

Sam asks for specific suggestions to help our underdone relationship with Indonesia. I\'ve got nothing against a high-profile \'major leadership gesture\', but many years ago a wise observer told me that the most useful relationship with Indonesia would comprise a spiderweb of ties that

Any more tricks up Bernanke sleeve?

For many, US Fed Chairman Ben Bernanke has been a skilled central banker who helped the US get through the 2008 global financial crisis and has used a bold array of unconventional policy tools to try to get the recovery going more strongly while maintaining low inflation.  During the

Outsourcing aid: To whom?

Danielle Romanes has suggested that if AusAID is short of capacity to administer the planned increase in aid, it can be effectively outsourced. Hugh White accepts the point. But how should we evaluate these alternative channels? The World Bank, currently by far the main channel for

China re-balancing?

In 2010, China\'s current account surplus was over 10% of GDP. Just a year later the surplus had fallen to less than 3% as imports grew faster than exports. The International Monetary Fund is expecting a further fall to 2.3% this year, before rising to around 4% over the next few years. Does

Best case? Europe will stagnate

The IMF has just wrapped up its latest half-yearly meeting in Washington. The regular forecasts of economic prospects involved some fancy footwork because of the great uncertainty around Europe.  Overall, things now look better than they did in January (when the Fund made an interim

Commie spies and the World Bank

With Jim Yong Kim (pictured, to President Obama\'s right) now formally appointed as President of the World Bank, it might be worth relaying a footnote on the history of this position. It does seem curious that the US should have pre-emptive rights over the World Bank presidency, leaving the

China still has plenty of room to grow

With the European economy still teetering and the US recovery fragile, the world is heavily reliant on China to put in a good growth performance. So far so good. After 9.2% GDP growth in 2011, the first quarter of 2012 recorded a respectable 8% annualised growth rate. While this was a bit below

World Bank game of thrones

The selection of Robert Zoellick\'s successor as President of the World Bank is turning out to be more interesting than expected. Rather than putting forward a high-profile candidate (like Hillary Clinton or Larry Summers), US President Barack Obama has nominated Jim Yong Kim, Dean of Dartmouth

Monetary policy works with help from banks

In an Economic Briefing in The Australian Financial Review, Lowy Institute Visiting Fellow Stephen Grenville writes that Australian banks have an interest in following the signals of the RBA.Australian Financial Review, 30 January 2012, p. 21

Australia shouldn't build cars, or subs

The ongoing saga of manufacturing cars in Australia is going through one of its routine phases, where Detroit puts the hard word on Canberra for more taxpayer-funded subsidies, under threat of taking the production to some country where cars can be produced far more competitively. This threat has

The renminbi as reserve currency II

Even if China was prepared to abolish capital controls and accelerate the creation of deep capital markets in order for the renminbi to become a reserve currency (see part 1 of my post here), the renminbi would probably remain a small part of official reserve holdings. The Japanese yen, for

The Renminbi as reserve currency

The idea that the renminbi will become an important reserve currency, perhaps displacing the \'exorbitant privilege\' enjoyed by the US dollar, has been given added impetus by a blueprint for China\'s international capital reforms just published by the Chinese central bank, the People\'s

For Greece, the pain is just beginning

With almost all private-sector bond-holders agreeing to a restructuring deal and the hold-outs gathered in compulsorily, another stage in the Greek saga has passed. But this is just a momentary pause in an unfinished journey to an uncertain destination, with a lot more pain for the Greeks and their

How to succeed in business in Indonesia

Over the past year or so, the success of the Indonesian economy has been applauded by foreign commentators and business-people (and, belatedly, by the credit rating agencies). Foreign investment has doubled over the past couple of years and Vice-President Boediono has a good story to tell. But it\'s

Zoellick unimpressive legacy

Robert Zoellick has announced that he will move on from his position as World Bank President at the end of his five-year term. Sebastian Mallaby has taken the opportunity to write a hagiography eulogising the brilliance of Zoellick\'s transformation of the previously directionless and

Resisting financial reform

Ever since the 2008 global financial crisis, the need for radical reform to financial regulation has been obvious. But the finance industry wants to minimise its regulatory constraints. The response to the proposed Volcker Rule, which would ban banks from proprietary trading, shows how hard the path