The Stimulus Deception | Rob Arnott Explains What Economists Are Getting Wrong

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