The global economy and the lessons of 2006

Barring shocks, markets and economies are heavily influenced by trends of the recent past. Economist Stephen Roach looks at what 2006 can teach us about the year ahead.

The turn of the calendar year is always a convenient time for taking stock - looking back on the year just ended and pondering what that passage of time portends for the future. The temptation is to wipe the slate clean and come up with a fresh look at the macro puzzle. Yet barring shocks, economies and markets don't operate in such a discontinuous fashion - they are heavily influenced by trends of the recent past. Notwithstanding the inertia of such an autoregressive world, I have long believed that we macro practitioners periodically need to look inside ourselves and re-examine what worked and what didn't. In the mark-to-market spirit of personal growth, I present the Lessons of 2006.

Global rebalancing: important consequences

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