Rudiger W. Dornbusch
Rudiger W. Dornbusch, Ford Professor of International Economics, died of cancer at his home in Washington, D.C., on July 25. He was 60 years old.
Dornbusch was an internationally renowned macroeconomist who made fundamental contributions to economic science and to international economic policy design. A member of the MIT faculty since 1975, he held joint appointments in the Department of Economics and the Sloan School of Management.
He was widely acclaimed for his work on the theory of exchange rate determination and international economic policy.
Dornbusch served as adviser to manyDornbusch served as thesis adviser for more than 125 doctoral students, training many of today's leading international economic policy scholars and practitioners over his 27 years on the MIT faculty. His students have taught at prestigious universities and held high-ranking posts in finance ministries and central banks worldwide.
"Other faculty held luncheon meetings with their advisees, but Rudi held a weekly breakfast and demanded that his students arrive on time at 8 o'clock-- an unknown hour for many students! -- to participate in discussions of ongoing research," said James M. Poterba, associate head of the Department of Economics. Poterba added that despite the hour, the students "would not have missed the breakfasts for the world."
At a celebration for Dornbusch's 60th birthday, Olivier Blanchard PhD '77, head of Department of Economics and a former Dornbusch student himself, presented Dornbusch with a collection of letters from many of his past students. Many of the letters noted Dornbusch's boundless enthusiasm for research and praised his rigorous standards as an adviser.
Dornbusch an expert on crisesDornbusch was a prominent expert on "economic crisis management" who carried out detailed analyses of many historical episodes of hyperinflation, debt default, and related economic maladies. His advice was widely sought by business groups and participants in financial markets.
In a paper published in the mid-1970s on exchange rate dynamics, now one of the most-cited economic contributions of the last half century, Dornbusch showed that shocks to a country's monetary policy could lead to larger exchange rate movements in the short run than in the longer run. In calculating the amount by which short run exchange rate movements would "overshoot" the long run adjustment, Dornbusch developed a solution method for dynamic economic models that has found wide application in many economic contexts.
Kenneth S. Rogoff PhD '80, a former student of Dornbusch who is now a Harvard professor and the current economic counselor and director of the International Monetary Fund Research Department, identified "overshooting" as Dornbusch's key and lasting contribution to international economics. He called the 1976 paper "elegant," "path-breaking," and a "perfect illustration of why the search for abstract beauty can sometimes yield a large practical payoff for both policy makers and graduate students."
John S. Reed '61, retired chairman of Citigroup and a life member of the MIT Corporation, called Dornbusch as a "this is what the facts are" economist. "He never let fad or emotion obscure the fundamental realities of the economic situation," Reed said. For example, Dornbusch was one of the first to point out that Mexico's economic circumstances in the mid-1990s were not sustainable.
Dornbusch was a contributor to Business Week magazine for many years. In 1997, he co-founded FDO Partners, a firm that provided investment advice and managed funds invested in emerging markets. Until just a few weeks before his death, he remained actively involved in analyzing economic policy in developing nations, most recently working with MIT colleague Ricardo Caballero to offer suggestions for fiscal and monetary reform in Argentina.
Dornbusch was recently named a Distinguished Fellow of the American Economics Association, where he had served in the past as vice president. He was also a Fellow of the American Academy of Arts and Sciences and of the Econometric Society.
Born on June 8, 1942, in Krefeld, Germany, Dornbusch received his undergraduate education at the University of Geneva, graduating in 1966. He received his doctorate in 1971 from the University of Chicago.
Dornbusch is survived by his wife, Sandra Masur of Boston and Washington, and a brother, Paul Josef Dornbusch, of Krefeld.
A memorial service will be held Sunday, Oct. 6 at 2:30 p.m. in the Wong Auditorium in MIT9s Tang Center. A reception will follow at 4:30 p.m. at the Faculty Club.