[FOUNTAIN]An economic loss

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[FOUNTAIN]An economic loss

"That winter was pretty darn cold. The professor mercilessly shot questions at his students who came to the classroom at an ungodly hour without eating breakfast. If anyone failed to answer the professor's questions satisfactorily, that person was ruthlessly embarrassed in front of everyone." These are the words of Kenneth Rogoff, a professor on leave from Harvard and the economic counselor and director of the International Monetary Fund's Research Department. The time was 1977, when Mr. Rogoff was enrolled in the Ph.D. program at the Massachusetts Institute of Technology. Among the students were Paul Krugman, 49, currently a professor of economics at Princeton University, Lawrence Summers, 48, a former Treasury Secretary and now president of Harvard University, and Jeffrey Sachs, 48, professor of economics at Columbia University. All are world-renowned scholars of economics. Back when they were students, the three were embarrassed in front of their class by one professor and one professor only. The professor was Rudiger Dornbusch, who died last weekend at age 60.

Mr. Krugman was a Ph.D. candidate at MIT, but Mr. Summers and Mr. Sachs, who were at Harvard, also came over to attend Mr. Dornbusch's class on expectations and the fluctuation of currency exchange rates, a theory contained in his seminal paper published in 1976, a year after he joined the MIT faculty. Mr. Dornbusch argued that currencies can respond instantly in daily exchange trading, while a country's economic growth, employment levels and inflation rate adjust slowly. But once the others do adjust, the pressure comes off the currency, which then returns to normal value. The phenomenon is called overshooting, since Mr. Dornbusch's analysis focused on the volatile aspects of the currency fluctuations. This is often regarded as one of the most important findings in post-war economics scholarship.

Mr. Dornbusch, who was also very much interested in real-world economics, had a huge influence over economic policies of Latin American countries. He frequently visited Korea where he had many acquaintances, including Professor Park Yung-chul of Korea University, and provided advice and full support during and after the financial crisis.

Though being treated for cancer, Mr. Dornbusch taught in the spring semester and traveled to Geneva in early June to take part in a panel discussion. Sixty years was too short for a man who had tons more to teach. Heartfelt condolences go to Mr. Dornbusch's family. He will be sorely missed.



The writer is a JoongAng Ilbo editorial writer.

by Sohn Byoung-soo

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