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Unformatted text preview: revised ely0119.03 Globalization and Its Challenges Stanley Fischer 1 2 I stand here with deeply conflicting emotions. I am honored to be delivering this prestigious lecture. I am profoundly sad that Rudi Dornbusch, who should have delivered the Ely Lecture, died in July last year and that I am here in his place. So I would like to start by talking about Rudi. Rudi was born and grew up in Krefeld, Germany. He was an undergraduate at the University of Geneva, and completed his Ph.D. at the University of Chicago in 1971, which is where we met. He was a student of Robert Mundell, and both the subject matter the development of the Mundell-Fleming model and the elegance and insights of his early work reflected Mundells influence. He taught at the University of Rochester and at the University of Chicago before accepting an offer from MIT in 1975. In 1976, soon after coming to MIT, Rudi wrote his most famous and influential theoretical article, Expectations and Exchange Rate Dynamics. As Ken Rogoff said in his celebratory lecture on the 25 th anniversary of its publication, The overshooting paper marks the birth of modern international macroeconomics. 3 From the late 1970s, Rudi became increasingly interested in policy issues. Within a decade, he had become one of the outstanding policy economists of our time. In his policy work he displayed the same rare talent as he had in his theoretical work, of being able to extract the essence of a complicated problem and explain it in terms that made it seem simple. Among his policy papers, the most famous is the 1994 Brookings paper with Alejandro Werner that predicted the Mexican peso crisis, but that is only one of many applied papers that repays rereading. As his policy interests grew, Rudis fame spread. He was an indefatigable global traveller, speaker, and writer, and a frequent columnist. In his more popular articles, in his columns, and on the podium, his wit and the speed of his mind made him an exciting and formidable presence. He was one of the finest debaters and polemicists in the 1 Citigroup. This is a revised version of the Ely Lecture presented at the American Economic Association meetings in Washington, DC on January 3 2003. The Ely Lecture was originally to have been presented by Rudi Dornbusch, who died on July 25 2002. 2 I am grateful to Andrew Balls, Olivier Blanchard, Vittorio Corbo, Angus Deaton, Peter Diamond, Jaewoo Lee, Prachi Mishra, Ratna Sahay, Lyn Squire, Larry Summers, and John Williamson, and to my Citigroup colleagues, Lewis Alexander, Eric Darwell and Dana Peterson, for their assistance and advice. Views expressed are those of the author and not necessarily of Citigroup....
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