Rudiger Dornbusch: Exchange

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

“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

Literature , Study , Time , Drawing

“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

“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

Loss

“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