Federal Reserve Chairman Alan Greenspan can take only partial credit for the longest economic expansion on record in the 1990s, Morgan Stanley's chief economist Stephen Roach wrote in Foreign Policy, a magazine published by the Carnegie Endowment for International Peace.
"Greenspan's leadership in monetary policy undoubtedly played an important role in fostering the conditions that allowed the US economy to surge in the 1990s," Roach wrote in the magazine's January-February issue.
"A judicious focus on fiscal discipline" by former US President Bill Clinton's administration also helped the economy expand from March 1991 to March 2001, the longest boom in history, Roach wrote. "No one should believe that the economic boom of the 1990s was the work of just one man or just one monetary policy," he said.
Roach said Greenspan's predecessor, Paul Volcker, gets most of the credit for bringing inflation down during his eight years at the Fed starting in 1979, though Greenspan brought it down further.
Roach also said Greenspan's rapid interest rate cuts, which drove the overnight lending rate down 5.5 percentage points from January 2001 to June 2003, helped cushion the bursting of the stock market bubble. Still, low interest rates may have fueled "the biggest bubble of all: Residential property," with inflation in home prices running at an annual 8.8 percent, Roach said.
Roach said Greenspan can be credited for spotting a rise in productivity, or output per hour of work, before most other economists. The 78-year-old Fed chairman has kept monetary policy independent from politics, Roach said.
The dollar has been stable during Greenspan's 17 years as Fed chairman, "a noteworthy accomplishment," Roach said, although the large US deficit in trade is likely to be corrected through a falling currency.
Greenspan's non-renewable term expires on the last day of January 2006.
"Greenspan will be a tough act to follow," Roach said.
"But his success was as much an outgrowth of history as it was a reflection of any one person."
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