The U.S. Federal Reserve is being widely blamed for the recent eruption of volatility in emerging markets. But is the Fed just a convenient whipping boy?
It is easier to blame the Fed for today¡¯s global economic problems than it is to blame China¡¯s secular slowdown, which reflects Chinese officials¡¯ laudable efforts to rebalance their economy. Likewise, though Japan¡¯s ¡°Abenomics,¡± by depressing the yen, complicates policymaking for the country¡¯s neighbors, it also constitutes a commendable effort to bring deflation to a long-overdue end. So, again, it is easier to blame the Fed.
And, for the affected emerging economies, the Fed¡¯s tapering of its massive monthly purchases of long-term assets ¡ª so-called quantitative easing (QE) ¡ª is certainly easier to blame than their own failure to move faster on economic reform.
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