How do Dornbusch's ideas relate to today's crises?
The fundamental insights of my work remain relevant to today's global economy. The interaction between capital flows, interest rates, and exchange rates is still a critical driver of financial stability. When countries face sudden stops in capital or inflationary pressures, understanding the dynamic adjustments, the role of expectations, and the political feasibility of policy responses—whether to let a currency adjust or to defend it—are all echoes of the issues I wrestled with.
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