Staatsverschuldung als Quelle der Nicht-NeutralitÃ¤t - Ein Beitrag zum Ricardianischen Ãquivalenztheorem
JÃ¼ttner, D. Johannes
Fundamentals, Bubbles, Trading Strategies: Are they the Causes of Black Monday?
MÃ¶glichkeiten und Grenzen der Wachstumspolitik
Anmerkungen zur normativen Interpretation von Leistungsbilanzsalden
Die Berechenbarkeit der Politik - Eine Bemerkung zur Frage der normativen Interpretation von Leistungsbilanzsalden
BÃ¼hler, Wolfgang and Herzog, Walter
Die Duration - eine geeignete Kennzahl fÃ¼r die Steuerung von ZinsÃ¤nderungsrisiken in Kreditinstituten? (Teil II)
Some Remarks on Definition and Magnitude of Recent Capital Flight from Developing Countries
Konstanz Seminar on Monetary Theory and Monetary Policy
Die Volkswirtschaftslehre im Nationalsozialismus
Welcker, Johannes and Kloy, JÃ¶rg W.
Professionelles OptionsgeschÃ¤ft â Alles Ã¼ber Optionen auf Aktien, Renten, Devisen, Waren, Terminkontrakte
âGovernment Debt as a Reason for Lacking Neutrality - A Contribution to the Ricardian Equivalence Theoremâ
While Barro did in fact prove the validity of the Ricardian equivalence theorem for making positive bequests, he was, however, in no position to define under what circumstances a motive for bequests actually exists. Since private individuals "respond" to increased government debt by increasing the legacies they hand down, it is evident that the very level and, consequently, actual bequests depend on the level of government borrowing. If the level of government debt falls short of a certain limit, it turns out that - although there is a motive for handing down legacies - actual bequests are not made. This means that government is in a position to determine through the level of its borrowings whether a motive for bequests actually materializes. In other words, the Ricardian equivalence theorem is a function of the level of government borrowing. If government adopts a rate of borrowing that reduces the handing down of legacies to about nil, the result is an undercapitalized steady state. In order to arrive at the golden rule of capital accumulation, there is a need for forced capital formation. It is impossible to counteract the lowering of the level of government borrowing by adequately reducing bequests because of the fact that bequests are actually not made in spite of an existing motive therefore, which means that this policy generates the desired results. Since bequests are consequently not made in the pareto-optimal steady state, optimum fiscal policies are independent of an existing motive for making bequests. It is identical with the one contained in the model precluding the motive for making bequests.
JÃ¼ttner, D. Johannes
âFundamentals, Bubbles, Trading Strategies: Are they the Causes of Black Monday?â
This paper attempts to shed some light on the causes of the sharemarket boom of the mid 1980s and the subsequent crash in October 1987. Traditional finance theory offers little to explain the share price gyrations. Although fundamentals and to a lesser extend dividend growth, have played a role, we are left in the dark about the pronounced fluctuations of the required share market yield. The stock price movements resemble the inflation and the bursting of a bubbles. The bubble hypothesis, however, essentially entails irrational behaviour; this description contrasts with the assumptions made in the literature. According to the rational bubbles theory, participants in asset markets play a calculating game that allows them to retreat before the inevitable collapse of speculatively inflated prices. The swings of the last share market cycle were magnified by the wide-spread adoption of trading strategies which, ironically, were developed on the basis of the efficient market hypothesis. Portfolio insurance and other trading strategies aggravated the crisis and index arbitrage became ineffectual.
âGrowth Policy Opportunities and Limitsâ
The scope for growth policy action has contracted to date as a result of a variety of changes. The growth weakness in the Federal Republic of Germany is to be explained, in part, by changes "exogenous" conditions that are, to a large extent, not subject to political influence. Another source of growth-dampening effects are change in the structure of social preferences that are not only difficult to influence by economic policy instruments, but are, moreover, justifiable in welfare theory terms to a very limited extent only. However, even where growth policy is, as a matter of principle, in a position to avail itself of effective instruments, the scope for action is limited: in monetary and financial policies, the scope for expansionary action has narrowed as a result of mismanagement by financial policy-makers. Consequently, there is a demand mainly for allocation policy. Although this offers a variety of meaningful policy options as a result of shifts in government spending away from subsidies toward public investment in areas suffering from bottlenecks, of reforming corporate taxation and of increasing the flexibility of goods markets and the labour market, these are precisely the fields in which the political and - understandably in some subareas - the social resistance is especially strong. Moreover, such changes in allocative framework conditions mean delays in the economic process that are relatively long so that policy-makers must be particularly long-winded. Overall, the chances that growth policy is in a position to contribute to a noticeable acceleration of the pace of growth in the Federal Republic of Germany must be considered to be fairly limited.
âObservations on the Normative Approach to Interpreting Net Balance on Current Accountâ
The normative approach to interpreting net balances on current account by Issing and Masuch is based on a simple analytical framework that is subject to the limitations mentioned below: (1) It extrapolates the decision-making logic of the individual's intertemporal choice as a consumer to the level of the national economy without taking account of the resultant aggregative and structural effects. (2) It does not have to take into consideration an exchange rate and it assumes that net surpluses on current account - as a result of increased domestic savings - would be absorbed by increased investments abroad. By contrast, this paper shows that net surpluses on current account generate market signals that lead to an expanding domestic investment activity. (3) Foreign assets acquired by means of current balance surpluses do not imply growth in real wealth. (4) Even if domestic labour supply should contract in the Federal Republic of Germany, it would not appear to be reasonable to adjust the production potential to a net transfer of resources abroad in order to form net foreign assets. Priority must be given to domestic goods supply and productive investments at home.
BÃ¼hler, Wolfgang and Herzog, Walter
âThe Duration-Based Concept - A Meaningful Approach to Managing Banking Institutions' Risk of Interest Changes? (Part II)â
This is the second part of a contribution that discusses the extent to which the duration-based concept, in its net assets-related form is a meaningful approach to managing banking institutions' risk of interest rate variations. This discussion is, however, no continuation of the theoretical assessment of that concept's pros and cons. It rather attempts, with the help of a simulation model based on empirical interest rate data compiled for the period 1972/1986, to analyze the quality of various duration-based approaches to risk management. The simulation runs have produced a number of remarkable results: contrary to the wide-spread opinion, banking institutions, for instance, that are characterized by fixed-interest lending surpluses neither run any risk in respect of their net interest income when interest rates go up nor do they have any opportunity in respect of the net interest they earn when interest rates go down. It is rather a fact that lending terms, much more volatile here than borrowing terms, lead to a much stronger response to market interest rate variations by interest earned compared to interest due in spite of the smaller volume of interest-variable assets. An analysis of results shows on the one hand that "net cash assets" as a management quantity are, since they are aimed at immediate hedging of net assets, inappropriate for managing net assets within the planning horizon. Moreover, the simulation runs based on the management quantity of "ultimate net assets" make it clear on the other hand that the assumption of uniform interest rate variations result in management mistakes of a dimension that are no longer acceptable. By taking account of maturity-specific yield fluctuations on the capital market, it has been possible to obtain management results that are - it is true - partially better, but in no way satisfactory overall. So, it should be noted as a major result that the description of changes in the behaviour of banks' individual interest rates is indispensable to managing banking institutions' interest rate Variation risk. It will therefore be a matter of prominent importance in future to analyze the empirically ascertained behavioural changes in respect of anyone business position and to take account of the data obtained in managing position-specific interest rate variation risks.
âSome Remarks on the Definition and Magnitude of Recent Capital Flight from Developing Countriesâ
The magnitude of capital flight flows suggest that they are a response to asymmetric risk. What many capital flight afflicted countries have really experienced is âround trippingâ of flows. If these flows are being interpreted as a real transfer then the out-flows should have occurred over a considerably longer period of time. The argument that capital flight results in a loss to the economy in terms of investment is weak since outflows were matched by inflows of foreign borrowing. Recent years, however, witnessed a decline in international banking lending. Further research is needed to investigate the consequences of this on the type of capital flight taking place. An adequate estimating model needs to be developed to measure a resource transfer which might occur when inflows of capital taper down. If Method I is to be adopted then we have to develop a technique to separate commercial credits and normal portfolio diversification induced flows from the capital flight estimate. Policies to control and eradicate the problem need a clear understanding of the type of capital flight being transacted. An a priori choice of definition would cloud our understanding. The choice should depend upon the particular historical episode and country under investigation. A country could experience a one-way flow or two-way flows. The first entails an improvement in the overall investment climate brought about by macroeconomic adjustment. Bi-directional flows as analysed in the capital flight context require policies that root out the causes leading to discriminatory treatment of domestic capital. Solution to the problem will be greatly enhanced by an understanding of the phenomenon.
âKonstanz Seminar on Monetary Theory and Monetary Policyâ
The 20th Konstanz Seminar on Monetary Theory and Monetary Policy dealt with the impacts of the especially in Europe prevailing increase in monetary integration. A panel discussion on monetary cooperation with representatives of several central banks supplemented the program. This report summarizes the papers, and presents the discussions.