IneffektivitÃ¤t der Wirtschaftspolitik bei ârationalen Erwartungenâ?
Fristigkeitsaspekte in der Theorie der Stabilisierungspolitik
Khan, Waseem and Willett, Thomas D.
The Monetary Approach to Exchange Rates: A Review of Recent Empirical Studies
Heri, Erwin E.
Wechselkursbewegungen â Einige Ergebnisse einer Analyse der kurzen Frist
Theoretical Principals of the Buffer Mechanism, Monetary Quasi-Equilibrium and ist Spillover Effects
Causal Relationship between Domestic Credit and International Reserves: The Experience of Developing Countries
Inflationary Expectations and the Demand for Money: The Greek Experience âA Comment and Some Different Resultsâ â A Rejoinder
Venture-Capital-MÃ¤rkte in Europa
Kumulative Wirkungen des Ausgaben- und Transfersystems
FinanztitelmÃ¤rkte und Unternehmensfinanzierung
Kundenkalkulation in Kreditinstituten
Fiskalpolitik in kleinen offenen Volkswirtschaften
âIneffectiveness of Economic Policy under "Rational Expectations"? An incorrect but also model-specific assertionâ
The "rational expectation hypotheses", macroeconomic theories based on the rational expectation theory conceived by John F. Muth, have become enormously popular in the past decade, beginning with the studies by Lucas, Sargent and Wallace. The conclusion drawn from them regarding the ineffectiveness of economic policy economic policy intervention, especially money supply policy, has no effects on real goods production, but results solely in an increase in price level as long as economic policy action is rationally anticipated and is not taken abruptly - is certainly attractive from the viewpoint of liberal economic policy, but where rational expectation hypotheses are applied it is backed up only by model-specific arguments and is therefore contestable. Furthermore, the Argumentation of the "rationalists" contains the economic-policy possibility of an apparently risk-free containment of inflation. With the basic model of the rational expectation hypotheses it can be demonstrated that any form of economic policy intervention - whether procyclic or anticyclic, whether monetary or fiscal - is condemned to ineffectiveness with regard to real effects by the very make-up of the model. In the opposite direction, the logic of the basic model incorporates the possibility of fixing the price level almost at will by economic policy action without having to accept any real impact on goods production. In conclusion, it can be shown that these model-specific results are due mainly to the peculiarities of the Lucas supply function. A simplified, but perfectly plausible modification of the supply function results in real effects of economic policy, even if the not uncontroversial concept of rational expectations is retained, so that in the final analysis the thesis of ineffectiveness is reduced to a special assumption.
âMaturity Aspects in the Theory of Stabilization Policyâ
The current debate on the theory of stabilization policy is characterized above all by differing viewpoints and the resulting economic policy conceptions of Keynesian and monetaristic approaches, especially those of the New Classical Macroeconomics. The present study interprets these contradictory views as the expression of different maturity perspectives in analysis, using complete adjustment of private behaviour to the environment, which includes economic policy, as the maturity criterion. If it is assumed that even with complete adjustment a "rational explanation" of the existence of frictions (information asymmetries, long-term contracts, etc.) is possible, this indicates potential structural effects of economic policy even over the long run, in contrast to the so-called "ineffectiveness hypothesis" under rational expectations. Lastly, the problem of the consistency of short and long-term economic policy measures is discussed; in this respect it would seem important to distinguish between demand-side and supply-side shocks. It would therefore seem of paradigmatic significance for a synthesis of the existing approaches in macroeconomics to place emphasis on the co-ordination aspects and structural effects of economic policy.
Khan, Waseem and Willett, Thomas D.
âThe Monetary Approach to Exchange Rates: A Review of Recent Empirical Studiesâ
There has been tremendous interest over the past decade in the monetary approach to the balance of payments and exchange rates. Since the adoption of flexible exchange rates, a number of empirical studies of the monetary approach to exchange rates have been undertaken. Most of the first Generation of the studies reported results favorable to the monetary approach with its "new" hypothesis that high interest rates would be associated with weak rather than strong currencies, and more rapid economic growth would be associated with appreciation rather than depreciation. Later research provides much less support, however. This paper critically reviews the published empirical studies applying the monetary approach and presents new empirical evidence. We conclude that while the simple monetary approach model fits the data quite well for some countries over some times periods, these relationships do not hold up systematically across countries and over time. In addition to a number of technical issues of econometric estimation and model specifications, we emphasize the need to distinguish between short-run and longer-run applications of the monetary approach. As with domestic macro models, the monetary exchange rate models appear to have a great deal of explanatory power with respect to longer-run trends, but the operation of real factors substantially reduces their explanatory power for short-run analysis.
Heri, Erwin E.
âExchange Rate Movements - Some results of an analysis of the short-runâ
This essay examines the question of whether the theory of efficient markets, which is generally applied in analysing price formation on financial markets, can also be used to explain short-term price movements on the foreign exchange markets. In the theory of financial markets, a market is termed efficient when the negotiated prices or exchange rates reflect completely in every month all available information on past prices and anticipated future prices and their determinants. For empirical studies of efficiency hypotheses, this generally implies restrictions with respect to the significance of past information. In the present essay we speak of weak efficiency when past exchange rate changes can contribute nothing towards explaining current and forecasting future exchange rate changes. Furthermore, we speak of medium-strong efficiency when not only the history of the original series itself, but all information relevant to exchange rates has already been taken into account in the exchange rate concerned. The first part of the empirical section covers investigation of weak efficiency. With the help of autocorrelation analyses and non-parametric, so-called run or iteration methods, the hypothesis was tested with regard to whether it is possible to draw from knowledge of the past exchange rate trend conclusions as to the future development. Although in individual tests certain counterevidence was found, no systematic relationship could be found between current and past exchange rate changes and hence the hypothesis of weak efficiency could not be rejected. In the second part of the empirical section, more far-reaching information was examined with respect to its "efficient evaluation". The information involved is that relating to macrovariables, which are conventionally considered to determine exchange rates. Although here again individual tests produced certain counter-evidence, this form of efficiency, too, could not be rejected on a systematic basis. These results are regarded as evidence for the hypothesis that the great majority of short-term changes in exchange rates is attributable to unexpected changes in the determining macro-variables.
âTheoretical Principles of the Buffer Mechanism - Monetary Quasi-Equilibrium and its Spillover Effectsâ
In this paper we argue that present-day monetary theory - such as the portfolio balance approach and the wealth adjustment theory - incorrectly neglects the insights of modern disequilibrium analysis. However, this ommision may be of fundamental importance for our judgement on macroeconomic policy. Therefore, we try to develop a theoretical framework to bridge this gap. In this respect we discuss the buffer mechanism. Its main characteristic is that a situation of monetary excess capacity evolves non-price quantity adjustments in financial assets. By way of this equilibrating mechanism tendencies will arise towards a new ex post equilibrium. Together with the classical price mechanism it results in a type of a situation which we call "monetary quasi-equilibrium". This monetary quasi-equilibrium implies a subsequent transmission channel of monetary impulses to the real sector, namely the spillover of monetary excess capacity.
âCausal Relationship between Domestic Credit and International Reserves: The Experience of Developing Countriesâ
Three causality tests, Haugh, Granger and Sims are used to determine the nature of causal relationship between the components of monetary base of India, Malaysia, Mexico and Taiwan. The conclusion derived is that bidirectional causality exists between the changes in domestic credit and changes in international reserves for all four countries.
âInflationary Expectations and the Demand for Money: The Greek Experience "A Comment and Some Different Results" - A Rejoinderâ
Both writers, B-L and Himarios, have not estimated correctly the demand for M1 function. The demand for M1 in Greece is highly unstable. Taking as a cut-off point the year 1973, the estimation shows that the parameters of the demand for M1 function have undergone significant shift since 1973.
âVenture Capital Markets in Europeâ
In the current economic situation venture capital activities are highly desirable. The most appropriate approach to external equity financing of promising, yet highly risky young enterprises is generally believed to be the portfolio approach: a venture capital company acquires a fair number of minority interests, and the investing public has access only to venture capital company shares, which represent a venture capital portfolio. An alternative approach is the public new issue of young company shares and their subsequent trading on a suitable secondary market as early as possible in the development of the company. The author focusses on the second approach, on direct open market equity financing. Since it alleviates problems of valuation control and exit, this market is a necessary supplement as well as an alternative to the portfolio approach. Fundamental considerations and a survey of exchange and off-exchange markets for small company shares in Europe point to the need for two small company market segments: a bottom level segment and an advanced level segment. Advanced level segments serve young companies which already achieved profitability; these companies want to signal that they can pass a threshold of quality that is advanced though still below the level of full listing. By contrast, bottom level segments cater to companies that do not measure up to this standard. As the creation of new advanced level segments in various European countries indicates, there is a trend toward opening up European exchanges to young enterprises. As the author points out, even investor protection considerations do not militate against lecting this trend extend down to the bottom level segments, which should be activated or created. Finally, drawing on a study that he recently submitted to the Commission of the European Communities, the author outlines proposals aimed at fostering direct open market equity financing of promising young companies.
âCumulative Effects of the Levies and Transfer Systemâ
Model analyses confirm what has long been asserted in the political and scientific debate: Owing to the imperfect-co-ordination of levies and the transfer system, especially due to the great diversity of applied income definitions, income limits and relevant income periods in levies and transfer law, extreme marginal burdens on income may result and in individual cases genuine overturn effects can probably not be excluded. The real problematic area, however, is the medium income bracket into which more and more employees are moving up. It is characterized by coincidence of progressive income tax and degressive transfer entitlements with the outcome that the cumulated effects of the tax and transfer system result in no small number of cases in critically high marginal burdens. In amending the income tax rate table attention will have to be given to counteracting this coincidence of burdens precisely in the medium income bracket. Total co-ordination of the levies and transfer system, as occasionally called for in the scientific domain, would appear, however, to be neither feasible nor meaningful. The net balance or curve of the marginal burden is only an assessment criterion for the efficiency of the levies and transfer system. To try to express this yardstick in absolute terms would be misjudge the numerous independent objectives of the various transfers and of tax law. In our multi-tier transfer and levy system, it will continue to be necessary in the future to seek ever and again a compromise between objectively appropriate solutions and simple arrangements. And in the process attempts will continually have to be made to ensure that arrangements that are individually perfectly sensible do not interact to procedure implausible results.