Lujiazui Meets Wall Street: A Conversation with Robert Kaplan

Robert Steven Kaplan, 13th President of the Federal Reserve Bank of Dallas, delivered a lecture at NYU Shanghai on the importance of understanding global economic conditions and the role of monetary policy.

Speaking at the event organized jointly by the Volatility Institute at NYU Shanghai (VINS) and the Official Monetary and Financial Institutions Forum (OMFIF), Kaplan spoke to an international audience of students, investors, officials, market specialists and academics saying, “the global economy must be better understood in order to assess the economic climate in the United States.”

Kaplan, who was a senior associate dean at Harvard Business School in 2006 prior to serving as vice chairman of The Goldman Sachs Group, Inc, explained how living in Asia during his early business career shaped his outlook, “One thing that is hard to understand when you’re sitting in the US are the cultural differences. The system is different, the nature of the state is different, what’s possible is different,” he said.

Kaplan’s presentation was followed by a Q&A moderated by Meghnad Jagdishchandra Desai, Chairman of OMFIF’s Advisory Board.  Asked about the role of US monetary policy, Kaplan said it was “not designed to operate in isolation”, stressing that big trends such as demographics, globalization, high levels of debt to GDP and high levels of disruption should be addressed by structural reforms and other fiscal policies.

Commenting on the Federal Reserve’s issue watchlist, which includes Brexit and British relations with the European Union, Kaplan suggested keeping an eye on China’s high levels of overcapacity and debt to GDP ratio, as well as the multi-decade transition from a manufacturing, export-driven economy to one service-based and consumer-oriented.

“In a world that is far more interconnected today than ever, what goes on in China transmits back to the United States not only in the economy but in the financial market” Kaplan told the audience.

“Younger people today have a better sense of what can be disruptive. It’s affecting pricing power and how you think about capital spending,” he said. “Young students are also more likely to invent new businesses, which requires a much more open-minded and imaginative mindset,” Kaplan added.

Commenting on the value of the event, the director of VINS, Jian-Ye Wang, who was approached by several graduate students inspired by Kaplan’s lecture, Saïd “Conversations like these fulfill the mission of VINS and create a platform for Shanghai financial researchers to have an open conversation with experts within China and abroad, broadening the global perspective.” Wang said.

“We hope young innovators will continue to be inspired.”