Auslandsvermögen und Kapitalertragsbilanz der Bundesrepublik
Neumann, Manfred J. M.
Zwischenziele und Indikatoren der Geldpolitik
Büschgen, Hans E.
Struktur des Bankensystems und Geldpolitik
Amerikanische Wohnungsfinanzierung - Versuch einer vergleichende Studie
Der Einfluß der paramonetären Institutionen auf die Vermögensbildung, das Kreditangebot und die Geldpolitik
Foreign Assets and Balance of Investments Income of the Federal Republic of Germany
The article begins with a surprising statement. Since 1950, the Federal Republic has had a growing surplus of foreign investments over foreign liabilities; but in the same period, up to 1965, the balance of investment income has deteriorated more and more. In comparison, over the same length of time the United States have recorded a mostly parallel development of net foreign investment and the balance of investment income. There is a variety of reasons for this unusual trend in the German balance of payments:
1. There are several defects in the balance-of-payments statistics which result in exaggeration of the deficit on the balance of investment income.
2. After the war, Germany lost her entire foreign assets, while the foreign capital in Germany was still in existence at the end of World War II.
3. Payments by Germany under the London Convention of 1953 reduced interest payments only to a slight extent.
4. The most important item is the foreign investments of the German Bundesbank, which make a high percentage of total foreign investment since1950.
5. Germany was mainly a net-debtor of long-term private capital, and a net creditor of capital only to the extent of the transactions of the central government. Germany's adverse position is shown by the comparison with the U. S. A.
6. The same unfavourable development can be observed in the case of direct investments.
7. The long-term trend was influenced above all by the under valuation of the Deutsche Mark by the official exchange rate.
8. The appendix contains several computations of the low investment income from official foreign exchange reserves.
Neumann, Manfred J. M.
Interim Objectives and Indicators of Monetary Policy
This article deals with various set-ups for determining optimal interim objective an optimal indicator for monetary policy. The interim objective and indicator problems were not seen by academic economists for a long time, while monetary policy makers made do with intuitive solutions, the suitability of which could not be systematically checked. The interim objective problem is derived from the General problem of determining an optimal strategy which permits monetary policy instruments to be modified so that desired changes of macroeconomic target magnitudes can be attained. The formal solution presented by Brunner-Meltzer makes it clear that it is rational to concentrate on control of variables in the monetary sector, because in this way the uncertainty as to the system structure can be avoided. The indicator problem consists in determining a monetary variable which permits optimal estimation of the impact of monetary policy on economic activity. With various solution set-ups reasons are adduced to show why the interpretation of monetary policy must be based on an ordinal measuring concept and why simultaneous use of several indicators makes interpretation impossible. Finally it is shown that within the Brunner-Meltzer analytical framework, under certain conditions the extended monetary base can be derived as an optimal indicator of monetary policy.
Büschgen, Hans E.
Structure of the Banking System and Monetary Policy
Starting out from the investment preferences of banks and non-banks, the increase in the formation of money substitutes by entities other than money-creating banks is interpreted as a permanent improvement of the economy's liquidity concomitant with specialization in the banking field. In labour-dividing systems as in the U.S.A. and Great Britain, the money-creating banks are uniformly subject to central bank control on account of the "control criterion" - money creation. The decline in the significance of central bank money is accompanied by a decline in the significance of money supply policy. Institutions which make money substitutes available are not immediately affected by the central bank's control measures. A mixed-banking institution is subject to central bank control in respect of its money creation and of its (own) money substitutes which are held in lieu of cash and those which it offers to replace cash held by non-banks. In a system of institutions with mutually complementary functions, only the commercial deposit banks are subject to the direct control of the central bank. The liquidity effects caused by formation of money substitutes by other financial institutions are not susceptible of direct control. The efficiency of the central bank's interest policy, which influences the liquidity effects, is greater in a mixed banking system than in a labour dividing system, if the flows of money market and capital market funds that are to be regulated converge in that system and disgruent financing predominates (criterion of maturity transformation). To the extent that the trend towards congruent financing runs parallel to the labour dividing system, that is, the degree of maturity transformation diminishes, the effectiveness of the central bank's liquidity policy also decreases. Maturity transformation in the mixed-banking institution is, so to speak, a built-in stabilizer which supports the liquidity policy of the central bank.
American Housing Financing Attempt at a Comparative Study
Within a single Generation, American financing of housing has undergone a great change. Among the especially remarkable alterations are government insurance of housing mortgages, the general trend towards high, long-term, first mortgages, and the establishment of higher-level, mixed institutions which have given the housing sector access to the securities market. The financing of social housing construction is similarly in a state of flux. Although the term "social market economy" is unknown in America, the housing financing system there, as in nearly all progressive countries, has undoubtedly developed in that direction. In a country that still seems to be fettered ideologically to free competition, this is a revolutionary change. The comprehensive social security insurance and the plans for a guaranteed minimum income are further examples of a reality which has long since ceased to match up with the traditional ideology. How efficient is American housing financing? There is no satisfactory answer to this question. It can be assumed that there is a logical connection between financing possibilities and the standard of housing. For all the notorious slums, the American standard is generally high and has improved substantially since World War. Roughly 80 per cent of owner occupied-homes and rented housing units are of acceptable or better quality, and the degree of crowding (persons per dwelling or room) is extraordinarily low as compared with other countries. The fact that 60 per cent of all families can afford owner-occupied homes (mostly on the instalment plan) is likewise indicative of a high standard, for owner-occupied homes are generally larger and better equipped than rented housing units. But it is impossible to say to what extent the high standard is attributable to the financing methods or to other circumstances such as, for instance, the high average income. Furthermore, there are other yardsticks which go beyond the quality of dwellings. For example, the benefit of owning one's own home has in many?? cases been bought at the cost of increasingly longer distances between home and job. International comparisons are even more difficult. It might be assumed that the efficiency of housing financing is expressed by the difference between the mortgage interest rate and the interest rate for "riskless" investments of similar duration, e. g. government bonds. The narrower that margin, the more effective is the organization of the mortgage market. But the average mortgage interest rate in various countries is dependent among other things on the mix of large and small objects (owner-occupied homes), on the proportion of first-mortgage and lower-priority loans and on loan limits - factors which influence either the costs of the transaction or the risk. For other reasons the risk, too, is not the same everywhere. As mentioned at the beginning, the risk in America is greater than in Europe simply because urban districts, and hence real estate values, can change much more rapidly. Moreover, the margin between mortgage interest and interest on government long-term bonds is very unstable in American experience; it depends on General credit conditions. Finally, there is still a great deal of preliminary statistical work that ought to be done to obtain reliable reports on mortgage interest rates. For similar reasons the margin between mortgage interest rates and the rates banks pay for their funds may be misleading for international comparisons. But perhaps a start could be made with relatively small experimental studies of certain institutions whose functions are really highly similar. The capital market study of the OECD states "the concept of the efficiency of a financial system is very difficult to define objectively". According to the standards applied in this study, however, American housing financing may be regarded as relatively efficient. "The principal determinant of a market's efficiency seems to be its "fluidity" - a concept comprising a whole group of characteristics ... which include active competition betw??een financial intermediaries, a wide range of financial instruments and securities to meet the preferences of savers and users, mobility of funds between sectors, plentiful information, etc." The fluidity of the mortgage market has been enhanced by the two-level institutions which buy and sell mortgages. On the whole, competition between banks is active, with the exception of small towns in which borrowers find only a limited number of lenders. The recently achieved access to these securities market has opened up a new source of finance and will make a further contribution to the mobility of capital funds. American housing financing was historically very much localized and for that reason alone not optimal, but with government aid it has developed more and more into a national system.