Hesse, Helmut and Roth, Gisela
Die Zinsstruktur als Indikator der Geldpolitik?
De Grauwe, Paul and Dewachter, Hans
Chaos in the Dornbusch Model of the Exchange Rate
Nachfrageschocks und Wechselkursvolatilität
Das Sequenzing-Problem der Systemtransformation in Mittel- und Osteuropa
Irrationalitäten und Anomalien als Bestimmungsfaktoren währungspolitischer Entscheidungen
Die Rolle des Regionalbörsen am deutschen Kapitalmarkt heute und morgen (Teil I)
Die ersten vier Wochen der deutschen Terminbörse (Teil II)
Internationalökonomie - Ein System offener Volkswirtschaften (Werner Lachmann)
Hahn, Hugo J.
Währungsrecht (Günther Schleiminger)
Hesse, Helmut and Roth, Gisela
"The Interest Rate Structure as a Monetary Policy Indicator"
This contribution analyzes whether the interest rate structure would be a suitable monetary policy indicator in Germany. A discussion has been going on in the United States for some time on whether the interest rate structure should, as an indicator, be preferred to money supply whose informatory value has been impaired by financial innovations. Empirical studies by the Federal Reserve Bank of the interrelationships between the interest rate structure and the Gross National Product in real terms as well as the level of prices have reached the conclusion for the United States of America that the interest rate structure is of great informatory value for future movements of both final goals of economic policy.
There are three trends in economic theory that serve as the theoretical foundations of an indicator that is based on the interest rate structure: The relation Q according to James Tobin, the theory of expectations for the interest rate structure according to Irving Fisher and the interest rate theory according to Knut Wicksell. The latter must be deemed to have been the real inventor of the theory that the interest rate structure can be used as an indicator, because it was he who fathered the opinion that monetary policy is effective through its influence on the ratio between two interest rates. Within the framework of a theoretical review of an indicator based on the interest rate structure, the hypothesis is made that this indicator is less prone to innovation than the money supply Aggregates. This hypothesis, which must still be substantiated in academic terms, speaks in favour of the indicator based on the interest rate structure; the correctness of this view is doubtful mainly because its meaningfulness is limited by international capital movements. The empirical interrelationship between the interest rate structure and the Gross National Product is very close in the German case; the interrelationship between the interest rate structure and the level of prices is less close, however. The conclusion to be reached from this analysis is that the interest rate structure is no suitable indicator for German monetary policy. In an economy whose main characteristic is strong international economic dependence, the limitation of the informatory function of the interest rate structure on account of international capital movements may not be neglected.
De Grauwe, Paul and Dewachter, Hans
"Chaos in the Dornbusch Model of the Exchange Rate"
In this paper a model of the exchange rate is presented. The model incorporates interactions between different classes of agents. We consider two classes: fundamentalists who use PPP to forecast future exchange rates and chartists, using simple moving average schemes.
Moreover we allow the relative strength of these two classes to change over time. Imposing a specific functional form for the relative strength we obtain a closed form solution for the model.
The main conclusion of the paper is that these interactions can lead to chaotic paths of the exchange rates. This source of instability is independent of any arrival of news and can explain the recent findings of exchange rate movements that cannot be attributed to new information.
"Demand Shocks and Exchange Rate Volatility"
This paper analyzes a model of a small open economy with flexible exchange rates in which the production potential responds to changes in the real rate of exchange. Otherwise, the model conforms to the standard theory monetary exchange rate approach. The dependence of the level of output on the real exchange rate leads to a situation in which non-monetary shocks, which cannot be absorbed by suitable changes in the nominal exchange rate, unleash adjustment processes over time. It has been demonstrated on the basis of fiscal expansion that the real rate of exchange unambiguously overshoots its long-term equilibrium value; this is associated with a temporary rise of the domestic level of real interest rates above the world market level. The shape of the adjustment processes is not unambiguous for the nominal quantities. Any overshooting of the nominal exchange rate presupposes a sufficiently weak response of the trade balance at a correspondingly slow pace of adjustment of the domestic goods price level. With high price flexibility, however, overshooting will be the result.
"The Problem of Sequencing the System Transformation in Central and Eastern Europe"
Why is it that economic transformation in the former socialist countries in Central and Eastern Europe deviates so crucially from the perceptions of a relatively simple transformation process which we still had two years ago? Have problems been underestimated, or have governments been wrongly advised? This contribution discusses six of the especially important domestic economic problem areas, namely: (1) The existing laws are fundamentally different from the legal systems that form the basis of individualistically oriented market economy systems. (2) The responsibility for social services and the social system must be shifted from overmanned unproductive jobs to new public authorities and insurance companies. (3) The often overdimensioned industrial and commercial organizations must be restructured in an economically meaningful way so as to allow investment decisions to be reached in future by enterprises that act independently and do - as far as this is possible - not exercise monopoly power. (4) The responsibilities of the public sector must be redefined; it must be reorganized and provided with the revenues it needs for discharging its tasks without printing money. (5) The credit sector institutions (central bank, banks, capital market) must be developed under conditions that are extremely unfavourable; the business start-up debts represent high risks, whilst existing companies, which accumulated large amounts of debts in the past (with "soft" budget restrictions), must learn in a situation of economic depression to make ends meet with limited financial resources (with "tough" budget restrictions). (6) Inflation must be stopped precisely in a period of a purchasing power overhang inherited from the times of central economic planning. A description of these problems shows that interdependencies exist between problem solutions which are studied against the background of the following question: That must the sequencing of the system reform steps and political actions be that it conforms to the logic of economic interconnections and defuses conflicting interests? One obvious approach would be to begin at the open and of a network of interdependent problems. A study of the logic of this approach shows that corporate forms of organization represent the open end of such a network; forms of organization may be changed independently of other reforms. Consequently, this area must be regulated in a market economy fashion first (new civil code, new commercial code, new labour laws etc.). Such laws which can be realized quickly lay the foundations of the market economy system. New state ownership regulations, enactment of social services and social insurance sector bills, reform of public authorities and the taxation systems, enactment of banking bills, debt regulation (possibility through monetary reform) and reorganization of the banking sector, regulation and reorganization of the insurance sector and creation of a capital market would have to come in that order of priority. The fact that reform of money and credit comes rather late, is a special characteristic of the sequencing suggested in this model. The argument is that competition in the credit sector is of no priority and is no basic condition for reforming other sectors. Only after a capital market has been put in place on the basis of monetary stability and successful reforms in the financing and insurance sectors will the demand for stock and fixed-interest securities (government bonds) acquire the desired dimensions.
Reszat, Beate "Irrationalities and Anomalies as Determinants of Monetary Policy Decisions" Monetary policy cooperation among industrial countries is often deemed to represent a kind of dilemma not unknown to prisoners: Although cooperation would be advantageous for all concerned, the temptation is great that commitments given are not honoured and that a free-rider position is adopted in dealings with others. However, the behavioural assumptions are hardly suitable for describing, if only-with a modest degree of accuracy, the nature of international relations. Complete information and von-Neumann-Morgenstern rationality in decision-making rather represent the exception to the rule. Where international politics is interpreted as a problem encountered by small groups in decision-making, the prospects for cooperation present themselves in a much more favourable light. Such an interpretative approach would justify the inclusion into the model of anomalies and irrationalities. There are especially two aspects that deserve attention: the uncertainty associated with the actions of agents on the one hand and the motives and constraints agents accept as guidance for their actions on the other. Where the usefulness of any collaborative scheme is rated higher or lower compared to what it "objectively" is, disregard of the Neumann-Morgenstern rationality cannot be precluded. And where decisions are motivated by factors other than those outside observers would expect, such outside observers may consider this to be an "anomaly". Both would open up a wide spectrum of conditions and options for action that point to a way out of the dilemma.
"The Role of Regional Stock Exchanges on the German Capital Market Today and Tomorrow (Part I)"
The discussion about the future structure of the German stock exchange sector follows the beaten track. Most observers deem it a fact that the fragmentation of stock trading among eight stock exchanges - excluding the German Future Exchange (Deutsche Terminbörse (DTB)) - is harmful to the Federal Republic of Germany as a financial centre and reduces the liquidity of its stock markets. Those who advocate socalled regional stock exchange run the risk of being blamed for pursuing a narrow-minded policy, although it is not at all clear as yet what the functions of regional stock exchanges are and what the liquidity of German shares is. This contribution takes account of research results concerning the microstructure of securities markets and attempts in overall economic policy terms to make the discussion more objective. It outlines in detail the perspective now prevailing which is considered to represent a centralist and technocratic position. It contrasts with the competition-based approach deemed to have been academically substantiated in the USA where it is the main characteristic of stock exchange policy. This perspective relies, in the pricing process, on the integration of submarkets through communication well known from the foreign exchange markets and regards competition among domestic stock exchanges as an innovative procedure which ensures that stock trading ser-vices are available in the demanded quality and at attractive prices to the benefit of investors and - ultimately - issuers as well as the ability of national capital market to perform.