Ober- und Untergrenzen der öffentlichen Verschuldung
Crowding-out und die Frage nach der neutralen Steuerpolitik
Zwischenziele und Indikatoren der Geldpolitik in einer offenen Volkswirtschaft
Geldnachfrage, Bondnachfrage und Vermögenseffekte in der Geldpolitik
Zur Bewertung von Optionen und Optionsscheinen (Warrants)
Portfolioanalyse und die Konstruktion monetärer Modelle
Von Rosen, Rüdiger
IWF-Jahresversammlung 1978 im Zeichen internationaler Kompromißbereitschaft
Huppert, Paul Helmut
Gewaltenteilung und antizyklische Finanzpolitik Ein Beitrag zur Theorie institutioneller Bedingungen der Stabilisierungspolitik in der Bundesrepublik Deutschland
Die Bedeutung interner Verrechnungen für die Kreditkapazität einer Bank
Macht und Moral der Banken
Die Theorie des Kreditgeldes und ihre Anwendung im internationale Zahlungsverkehr
Regionale Aspekte der Konjunkturpolitik
Upper and Lower Limits of Public Debt
It is not surprising that after bad experiences with public debt in Germany old fears are evoked in the face of increasing public deficits. This explains why even today the 19th-century ideas of a balanced budget are still wide-spread. According to these ideas public debt is detrimental and only accept-able -under exceptional circumstances. However, such thinking is no longer adequate to present needs. In the sixties, the holdings of net monetary wealth by risk-averting private households quickly increased in the Federal Republic of Germany, which was accompanied by increasing indebtedness of the private firms. Due to the resulting "leverage effect" the firms are now much more vulnerable to business cycles. Thus the cyclical fluctuations of the whole economy are amplified. More economic stability could be obtained if the state - by increasing his debt - relieved the firms of their indebted-ness by himself holding the offsetting positions to the private households' net monetary wealth. At the same time, this would result in a transformation of economic risks: The private sector has to pay taxes on uncertain, fluctuating income and turnover; in turn it receives certain, constant interest yields from the state. Thus, an increased negative monetary wealth position of the state is the kind of public indebtedness we need. On the other hand, limits of public indebtedness are greatly exceeded as far as long-term future commitments (pensions, subsidies etc.) are concerned whose huge present value does not appear in any budget. In this sector possibilities for discretionary expenditure variations have almost entirely vanished. A strategy for public expenditure during the next years should consist in reducing these permanent statutory commitments for the benefit of interest payments on the simultaneously increased public debt. Finally, the financing of an increased public debt must be considered. The current "crowding out"-theory is only of little use in this context. This theory erroneously compares the functioning of the capital market to the functioning of a source. But since the state immediately spends the funds it borrows, it pumps - similar to an artificial fountain - back on the capital market what it has been absorbing just before. With each public expenditure surplus the private sector (which holds the corresponding surplus of receivables) therefore obtains funds that it seeks to reinvest. As long as public bonds continue to be a popular investment, there will be few problems for the state in financing future budget deficits.
Crowding-out and the Question of Neutral Monetary Policy
In the crowding-out controversy undue emphasis has been put on the constancy of the money supply (however defined) as an absence of monetary actions. 1-lowever, to judge fiscal actions, it is necessary to define a 'neutral' monetary policy; otherwise the outcome (and hence the multipliers) will be the result of two opposing policies. Different concepts of neutrality are offered and the likelihood of crowding-out examined.
lnterim Objectives and lndicators of Monetary Policy in an Open Economy
The interim objective-indicator concept of the German Bundesbank was modified a number of times in the past, but in 1973 a fundamental change was undertaken; that change may be regarded as coinciding chronologically with the introduction of flexible exchange rates. During the period of fixed exchange rates, the German Bundesbank pursued essentially a liquidity policy, which was subjected to frequent attacks above all by monetarist circles. In the period of flexible exchange rates, the central bank went over to a monetary concept more on the lines of monetarist proposals. This article shows that in the period of fixed exchange rates both concepts pursued practically the same interim monetary-policy objectives With the decontrolling of exchange rates in 1973, additional aspects presented then-selves for monetary policy and in particular for its efficiency. Under this sort of monetary system, there is much that argues for contrary effects of domestic monetary policy impulses on foreign countries, These contrary effects are of both macroeconomic and microeconomic nature. In the short run they are caused by international interest arbitrage and act via the balance of payments (circular flow aspect); microeconomically a similar contrary effect is exerted by international price relationships. This impairs the efficiency of monetary policy unless the nominal interest rate is also included in the theoretical monetary concept.
Demand for Money, Demand for Bonds and Wealth Effects in Monetary Policy
The object of this essay is to examine wealth effects in connection with changes in the quantity of money. The money quantity changes dealt with are attributable to open-market operations of the central bank or to exogenous influences such as balance-of-payments surpluses or budget deficits; changes in the value of money in the course of price level variations are also discussed. It is shown that a wealth-neutral open-market policy has the same income effects as a wealth increase induced by the quantity of money, which takes full effect on demand on the security market. This finding is compared with wealth-induced demand effects on the money and goods markets. lf real money-quantity changes are due to price effects, this income effect is accompanied by a second one based on the changes in the real value of security holdings.
On the Valuation of Options and Warrants
This contribution deals with the problem of valuing options and emphasizes an aspect which has scarcely been given any consideration in the option pricing theory developed in recent years: the diversification effect of options within the overall framework of the investor's portfolio. The theory of option pricing proceeds from a special hypothesis concerning the price trend of the shares for which options are concluded and investigates the functional interrelationship between the current share price and the option price. Since no endogenous determination of the share price is undertaken on the basis of equilibrium conditions, the diversifying effect of options within the investor's portfolio is likewise disregarded. In contrast, the present study adopts the method of a more General equilibrium analysis. First of all, it is shown that the classical capital market model is unsuitable for dealing with options on account of its postulate that all investors demand the same portfolio; in contrast, the Fischer Black variant of the model, which knows no riskfree form of investment, proves a suitable instrument for dealing with our problems. Two results obtained by applying the valuation principles derived from this model to the problem of option pricing deserve special mention.
- Generally speaking, there i-s no functional relation between current share price and option price, but only a relation between current share price and option price which is governed by the future (uncertain) trend of the share price within the framework of the market.
- Even if special preconditions imply a functional relation between current share price and option price, such relation coincides with that obtained with option pricing theory only provided that the market is risk-neutral.
Over and above these conclusions relating to options, the study also deals with the problem of valuing warrants. It is shown that under simple preconditions warrants can be formally treated as call options after allowing for their watering effect. Under the same assumptions, it proves that the issue of warrants has no effect on the market value of the issuing firm - a special variant of the Modigliani-Miller theorem on the invariance of capital costs relative to capital structure changes.
Portfolio Analysis and the Construction of Monetary Models
This contribution aims at formulating an optimization model based on budget theory for the derivation of supply and demand functions for assets and liabilities. Since the approaches in empirical studies deviate considerably from the theoretical conception of portfolio decision-making, a budget-theory portfolio model for characterizing monetary preferences seems to be more suitable for empirical studies than the conventional portfolio model with differing expectations and variances, i. e., risks. For there is scarcely a link connecting the process of framing an expectation and the determination of expectation and variance with the demand system that is to be estimated econometrically, so that in econometric studies the difference between a theoretically well founded portfolio model and an ad hoc demand system based en holdings cannot be perceived. For the derivation of supply and demand functions for paper titles, the contribution postulates that the household's financial preferences can be characterized by a utility function, in respect of which the arguments are the expected interest payments in the form of returns and costs implied by the claims held and liabilities incurred at the expected interest rates. Using the appropriate indirect utility function, with the interest and financial assets as arguments, an integrable demand system for paper titles is derived, which is compatible with the maximization hypothesis and conforms to the Yale principles of monetary model construction. Since this system gives optimal stocks, an adjustment mechanism can be specified to explain the deviation of the observed data from the optimal stocks. With quarterly data for the Federal Republic of Germany for the period from 1968 - 1975, a supply system with five assets and a demand system with four liabilities are estimated for the private non-banking sector.
Von Rosen, Rüdiger
IMF - Annual Meeting 1978 in the Spirit of International Cooperation
This report describes and comments on the most important results of this year's Annual Meeting of the International Monetary Fund. Since the Interim Committee of the Board of Governors of the IMF has developed into the probably most important decision-making body in the field of monetary policy, without having been legally authorized to do so, since it was set up in autumn 1974, this report is mainly based on the results of the negotiations within the Interim Committee. The twenty members of the Committee were unanimous in their assessment of the current situation and outlook for the world economy which they viewed with cautious optimism. As regards the question of resuming allocations of SDRs and the Seventh General Review of Quotas it was agreed to consider both these measures to expand liquidity as a package. The Committees recommendation to the Board of Governors to take a final decision and vote before the end of the year on the allocation of 4 billion SDRs in each of the next three years 1979 to 1981 was made without there being a need for new liquidity. However, the allocation of SDRs will contribute towards meeting the long-term global need to complement existing monetary reserves in a desirable manner and promote the objective of making the SDR the principal reserve asset in the international monetary system. The Committee's other resolutions relating to SDRs and concerning the rate of interest they carry, a substition account, and the maintenance of a minimum average balance (reconstitution) will additionally strengthen the standing of the SDR. As regards the review of quotas the Committee agreed to recommend a general increase in quotas of 50 per cent in order to bring about a better balance between the size of the Fund's resources and the need of members for balance of payments financing over the medium term. In this context, a part of the newly allocated SDRs are to be used to pay 25 % of the increase in the members' quotas. The Committee's resolutions regarding liquidity policy will no doubt considerably enhance the ability of the Fund to provide financing for effective transitional measures. The willingness of members to engage in constructive cooperation will also strengthen the IMF s position in the international monetary system.