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 DornbuschRelated topics
asset capital consistent developing draw establishing exchange formal formation framework large literature mobility model paper purpose rate rational recent role simple study theory time while ratesRelated quotes
Both Borges and Sartre, from their totally different extremes of denying literature a social purpose, were certainly perfectly aware that it has its implicit and unalterable social role in exploring the state of being, from which all other roles, personal among friends, public at the protest demonstration, derive. Borges was not writing for his friends, for he published and we all have received the bounty of his work. Sartre did not stop writing, although he stood at the barricades in 1968.
Nadine Gordimer
But further analysis and experience soon raised doubts about the efficacy of these new tools. Empirical research indicated that the Keynesian multiplier was much smaller than earlier analyses had assumed, reduced by a crowding out of interest-sensitive spending caused by an induced increase in the demand for money and by the effect of the larger national debt on long-term interest rates. The leakage of demand through imports and the effect of the fiscal expansion on the exchange rate further reduced the multiplier.
Martin Feldstein
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
The importance to economics of the study of institutions is no longer a controversial proposition, thanks in part to the scholarly literature generated by the new institutional economics movement. Institutions are more than organizations – property is an institution, but not an organization – but organizations are an important form of institution and will be the focus of my paper, as it is, to a considerable extent, of the new institutional economics.
Richard Posner
As a graduate student I studied mathematics fairly broadly and I was fortunate enough, besides developing the idea which led to "Non-Cooperative Games," also to make a nice discovery relating to manifolds and real algebraic varieties. So I was prepared actually for the possibility that the game theory work would not be regarded as acceptable as a thesis in the mathematics department and then that I could realize the objective of a Ph. D. thesis with the other results.
John Forbes Nash
