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Dornbusch’s Law

Economists recognize that there is a lot more to finance than just numbers and many of their principles apply to a very broad range of circumstances and behaviour. 

In the fall of 2019 I happened across a New York Times article written by Al Gore. In this article he used a theme or maxim called Dornbusch’s Law in the context of climate change

Rudi Dornbusch was an economist who worked at several prestigious American universities from the 70s to the early 2000s. Students of international macroeconomics are fond of quoting “Dornbusch’s Law.” 

It is not a rigorous statement and there are many similar versions, all called ‘Dornbusch’s law.

One of the clearest is; 

“Crises take longer to arrive than you can possibly imagine, but when they do come, they happen faster than you can possibly imagine”.

Rudi Dornbusch was referring to international macro-economic crises, but it applies more broadly. Al Gore was correct to use it in reference to climate change and it is equally valid in the current world of automotive collision repair.

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