KREDIT und KAPITAL - Issue 3/1975



Mayer, Thomas
The Structure of Monetarism (II)

Neumann, Manfred J. M.
Konstrukte der Zentralbankgeldmenge

Läufer, Nikolaus K. A.
Fiskalpolitik versus Geldpolitik. Zur Frage ihrer relativen Bedeutung. Eine empirische Untersuchung der BRD.

Matusza, Manfred
Optimale Transaktions-, Vorsichts- und Spekulationskasse. Diskussion einiger Lösungsansätze


Fase, M. M. G. and Kuné, J. B.
The Demand for Money in Thirteen European and Non-European Countries: A Tabular Survey

Book Reviews

Issing, Otmar
Einführung in die Geldtheorie (Heino Faßbender)

Deppe, Hans-Dieter
Betriebswirtschaftliche Grundlagen der Geldwirtschaft, Band 1: Einführung und Zahlungsverkehr (Joachim Süchting)

Rühl, Frank
Zur Nachfrage der Schweizer Banken nach Liquiditätsreserven 1959-1970 (Dietmar Kath)

Bärmann, Johannes (Hrsg.)
Europäisches Geld-, Bank- und Börsenrecht, Teil I: Bundesrepublik Deutschland (Hugo J. Hahn)

Hochgesand, Helmut
Theorie der Devisenspekulation (Peter Kuhlmann)


Mayer, Thomas
"The Structure of Monetarism (2)"

This paper continues the discussion of monetarism by taking up six monetarist policy propositions. They are: (1) the use of a reserve measure as an indicator of monetary policy, (2) the use of the money stock as the proper target for monetary policy, (3) belief in a stable money growth rate rule, (4) rejection of an inflation-unemployment trade-off, (5) great concern about inflation, and (6) dislike of government intervention. The interrelations of these propositions and their relations to the six propositions taken up in part 1 of this paper are discussed. Although at least five of them are clearly connected with other monetarist propositions, the connection is again such that one can accept some, without accepting the others.

It is argued that use of a reserve measure as an indicator of monetary policy has only a weak connection with all the other monetarist propositions. However, for the other propositions the interconnections are much closer. To give some examples, the use of the money stock as a target for monetary policy is connected to the quantity theory, since the quantity theory centers on the money stock, and also implies that the money stock can be measured properly, something that is needed if it is to be used as a target. Similarly, the stable money growth rate is connected to the quantity theory by the belief that the demand for money is stable, and it is connected to the money stock target since it is a specification of that target. The rejection of the inflation-unemployment trade-off fits well with the quantity theory because, if the Phillips-curve is in real terms, prices and the stock of money move proportionately. Numerous other connections between these propositions are traced.

The monetarist's opposition to government interference fits well with most other monetarist propositions. But it would be misleading to consider this to be the basis of monetarism. Instead, a preference for simplicity, and scepticism about our knowledge seem more basic.


Neumann, Manfred J. M.
"Constructs of the Monetary Base"

The German Bundesbank has founded its "new monetary policy" on a delimitation of the monetary base which differs in important points from all definitions hitherto used in the literature on monetary theory. In this study, a comparative, critical analysis of the construct developed by the Bundesbank is undertaken.

In the first part of the study, to begin with the most usual definitions of the monetary base are derived in an analytically comparable manner and their theoretical foundations are discussed. In particular, the simple monetary base, the extended, and the adjusted monetary base are dealt with. For all their difference, the constructs mentioned ad here to the common basic idea of undertaking a condensation of the sources of monetary liabilities of the monetary authorities that is appropriate to the given problem.

In a second part, the construct of the Bundesbank is analysed. The principle of its design is a selective compilation of certain uses of central bank money. The construct of the Bundesbank differs from other definitions of the monetary base in the following points: 1. Excess reserves on central bank accounts and minimum reserves for foreign deposits are treated, not as central bank money, but as sources of central bank money. The minimum reserves for domestic deposits are calculated, not on the basis of the prevailing minimum reserve rates, but on the basis of arbitrarily assumed, constant reserve rates.

The reasons advanced by the Bundesbank for its particular method are critically discussed in detail. In conclusion it is shown that, compared to other definitions of the monetary base, the Bundesbank's construct is not suitable either to give a reliable indication of the course of monetary policy at a given time or to serve as an intermediate target variable for monetary policy. Its use as an intermediate target variable is rendered more difficult by the fact that numerical target specifications for the growth of the Bundesbank's construct cannot be translated ex ante into numerical target specifications for the net acquisition of assets by the Bundesbank.


Läufer, Nikolaus K. A.
"Fiscal Policy versus Monetary Policy. On the question of their relative importance."

The hypotheses of Andersen and Jordan that the effects of monetary policy make themselves felt, not only more strongly and more rapidly, but also more reliably than those of fiscal policy could not be confirmed for the FRG in 1960-1970. In contrast to the assertions of Andersen and Jordan, in the FRG the effects of fiscal policy on economic activity have been roughly equally strong and at the same time both more rapid (shorter lag) and more reliable (more predictable) than the effects of monetary policy.

Furthermore, government expenditures do not merely displace and supplant private expenditures, but result on balance in expansive effects.

The study proceeds from the argument that the effects of fiscal policy have an impact in less than two years, while the effects of monetary policy need no more than two and a half years. From the (greater) dependence of the FRG on foreign trade, the author derives hitherto neglected theoretical points of departure for explaining the deviation of results from those of Andersen and Jordan.

The method applied is regression analysis of an explanatory equation for the national product, in which not only immediate, but also lagged effects of both monetary and fiscal policy are possible a priori. For econometric estimation of the effects distributed over time, the socalled Almon lag technique is used without, and for the purpose of comparison also with, end-point restrictions for fourth-degree polynomials. Compared with the procedure of Andersen and Jordan, there is a series of methodological differences, which are listed in a systematic compilation. The use of the initial stimulus instead of the fullemployment budget surplus as an indicator of fiscal policy impetus, and of the extended money base instead of the quantity of money as an indicator of monetary policy impetus deserves emphasis. To allow for the FRG's marked dependence on foreign trade, exports were also used as a measure of impulses from abroad.

For several reasons, growth rates of series of observations should be given preference over simple changes (first-order differences) in such series. The difference in the results with and without end-point restrictions for polynominals negligible.

These conclusions must be considered in conjunction with the results obtained by Waud for the U.S.A. and by Artis and Nobay for Britain, which similarly do not confirm the monetaristic hypotheses of the type investigated in this study. Hence, economic-policy recommendations for the FRG must be based on empirical findings which contradict the monetaristic hypotheses.


Matusza, Manfred
"Optimal Transaction, Precautionary and Speculative Cash. Discussion of Some Solution Approaches."

In this article possible solutions for determining optimal transaction cash, optimal precautionary cash and optimal speculative cash are discussed. Optimal transaction cash is calculated on the basis of the Baumol-Tobin inventory theory approach (premisses: complete information on the in-payment/out-payment pattern, credit and security interest rates, allowances for cash -> securities -> cash transaction costs). The models of optimal precautionary cash authored by Patinkin, Whalen and Sprenkle, which are discussed here, have defects. In Patinkin's model no convincing objective function is discernible, in Whalen's the cash -> securities - cash transaction costs and hypotheses concerning in-payment/out-payment patterns are lacking, and Sprenkle's precautionary cash is not optimal because information costs are not taken into account. A model is developed which avoids these disadvantages and proceeds from the premisses: complete information on security interest rates, but imperfect information on the in-payment/out-payment pattern, and allowances for transaction, illiquidity and information costs. Optimal speculative cash is determined as part of an optimal portfolio. The analysis proceeds from efficient portfolios; weighting of the efficient portfolios by a utility function with the arguments of expected return and risk results in the optimal portfolio and hence in the optimal speculative cash, which is calculated with and without allowances for transaction costs. Attention is drawn to the unsatisfactory situation of a dichotomy of cash holdings and basic possibilities of finding a solution are indicated.



Fase, M. M. G. and Kuné, J. B.
"The Demand for Money in Thirteen European and Non-European Countries: A Tabular Survey"

This study gives a survey (pp414) of the most important money studies on demand for money carried out for ten European Countries, Australia, Canada and Japan. Excluded are the contributions on the United States and the developing countries. Furthermore the authors confined themselves to time series analyses based on quarterly data only. The tabular survey lists the most important features of the reported studies.