Rudiger Dornbusch Quotes

Rüdiger "Rudi" Dornbusch was a German economist who worked in the United States for most of his career. Wikipedia

✵ 8. June 1942 – 25. July 2002

Rudiger Dornbusch: 10 quotes2 likes

Famous Rudiger Dornbusch Quotes

“Italians dream that the ECB (European Central Bank) will make their life easier than the Bundesbank does now… The new central bank is certain to establish itself at the outset as a direct continuation of the German central bank.”

Rudiger Dornbusch

Euro fantasies, 1996

“The paper develops a simple macroeconomic framework for the study of exchange rate movements. The purpose is to develop a theory that is suggestive of the observed large fluctuations in exchange rates while at the same time establishing that such exchange rate movements are consistent with rational expectations formation. In developing a formal model we draw on the role of asset markets, capital mobility, and expectations that have been emphasized in recent literature.”

Rudiger Dornbusch

Rudiger Dornbusch, "Expectations and exchange rate dynamics." The journal of political economy (1976): 1161-1176. p. 1161

“The most likely scenario is that EMU (Economic and Monetary Union of the European Union) will occur but will neither end Europe’s currency troubles nor solve its prosperity problems.”

Rudiger Dornbusch

Euro fantasies, 1996

“If there was ever a bad idea, EMU it is.”

Rudiger Dornbusch

Euro fantasies, 1996

“In figure 3 we show the money and domestic asset market equilibrium schedules for given stocks of each of the assets. Along MM the domestic money market is in equilibrium. Higher interest rates reduce money demand so that equilibrium requires a depreciation and thus a rise in the domestic currency value of foreign assets and - hence wealth. The exchange rate thus plays a balancing role by affecting the valuation of assets.”

Rudiger Dornbusch

Source: Open economy macroeconomics, 1980, p. 14

“The most serious criticism of EMU is that by abandoning exchange rate adjustments it transfers to the labor market the task of adjusting for competitiveness and relative prices… losses in output and employment (and pressure on the European central bank to inflate) will predominate.”

Rudiger Dornbusch

Euro fantasies, 1996

Rudiger Dornbusch Quotes

“The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought.”

Rudiger Dornbusch

Quotes in: United States. Congress. Senate. Committee on the Budget (2012). Concurrent Resolution on the Budget Fiscal Year 2013. p. 95

“Once Italy is in, with an appreciated currency, the country will soon be back on the ropes, just as in 1992, when the currency came under attack.”

Rudiger Dornbusch

Euro fantasies, 1996

“The model retains the uncomfortable property that any increase in demand for home output … leads to nominal and real appreciation… The uncomfortable fact remains that even in this model there is a short-run tendency for an expenditure increase to induce an appreciation… Expansionary fiscal policy will lead to an initial depreciation of the nominal and real exchange rate if … (it) is accommodated by an expansion in nominal money.”

Rudiger Dornbusch

Source: Open economy macroeconomics, 1980, p. 154-157; as cited by Partha Sen. Fiscal policy, the exchange rate and the current account : a re-examination. ; About the Mundell-Fleming model

“Monetary policy affects the … of goods and assets and (iii) effects through changes in explicit or implicit real interest rates on aggregate demand.”

Rudiger Dornbusch

Source: Open economy macroeconomics, 1980, p. 71

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