In this episode of Excess Returns, we welcome back Research Affiliates founder Rob Arnott to explore his provocative research challenging mainstream economic assumptions. Rob walks us through why government stimulus often fails to deliver real growth, how decades of rising spending have shaped today’s economic environment, and what the implications are for debt, deficits, and future returns. We also dive into trade policy, tariffs, and where Rob sees the best opportunities in today’s markets using Research Affiliates’ capital markets expectations.
Full Paper:https://www.researchaffiliates.com/publications/articles/1080-stimulus-does-not-stimulate
🎯 Topics Covered:
Why stimulus doesn't always stimulate economic growth
The hidden cost of high government spending
Lessons from Japan, Ireland, and the EU on fiscal policy
Why Keynes wouldn’t recognize today’s “Keynesianism”
The role of stimulus during crises like COVID and 2008
Tariffs as strategy vs. economic drag
Rob’s take on Trump, trade wars, and negotiating tactics
Crowding out: What debt does to private investment
Research Affiliates’ expected returns across major asset classes
Why large-cap U.S. stocks may be the most overvalued
The opportunity in value, small-cap, and international markets
