Evening Must-Read: Danny Quah: It Is Not Easy Being Leader Of The World

Danny Quah: It Is Not Easy Being Leader Of The World: “In Rajan’s view…

…sensible policy-makers ought to believe:

We would like to live in a world where countries take into account the effect of their policies on other countries and do what is right, broadly, rather than what is just right given the circumstances of that country.

The industrial countries, led by the US, would not play by these implicit rules of the game. Rajan’s statements… elicited a US response with four distinct lines of reasoning. The US central bank could not, by law, take into account the well-being of any party except the US economy… the world economy was not really as inter-connected as Rajan and others might think… if any foreign economy was adversely affected by US monetary policy, it was only because… [of] ‘the challenge is brought on by their own domestic policies’… hat is good for the US is, ultimately, good for the world. It must be tough to be global hegemon…