Rudiger Dornbusch: Demand

Rudiger Dornbusch was German economist. Explore interesting quotes on demand.
Rudiger Dornbusch: 20   quotes 2   likes

“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

Money , Home

“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

Change

“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

Money , Wealth