How did Dornbusch approach economic problems?
I approached economic problems by starting with the messy reality of policy. I'd look at a crisis, a debt problem, or a currency collapse, and then work backwards. What were the incentives driving the agents involved? What were the institutional constraints? I was less interested in abstract, static equilibria and more in the dynamic feedback loops and the political economy that shaped outcomes. Theory had to serve policy, not the other way around.
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