Meltzer, Allan H.
Die Wiederherstellung vernünftiger ökonomischer Rahmenbedingungen
Entwicklungstendenzen des Finanz- und Kreditsystems der europäischen sozialistischen Staaten
Mülhaupt, Ludwig and Küllner, Hermann
Probleme der Entscheidungsfindung im Bankbetrieb
Erfahrungen der Schweiz mit der Kreditplafondierung
Friedman, Milton and Jacobson Schwartz, Anna
Monetary Statistics of the United States Estimates, Sources, Methods
(Manfred J. M. Neumann)
Recktenwald, Horst Claus (Hrsg.)
Nutzen-Kosten-Analyse und Programmbudget, Grundlage staatlicher Entscheidung und Planung
Kursdeterminanten deutscher Aktien
Probleme der Geldtheorie
(D. Johannes Jüttner)
Meltzer, Allan H.
Restoring a Healthy Economic Environment
The fluctuations in economic activities may be explained in two ways. According to the one approach, expansions and contractions of macroeconomic magnitudes are attributable to the inherent instability of the private sector. The causes of them are mistakes and erroneous estimates in the combined actions of private individuals and waves of optimism and pessimism based on the long-term anticipations of the business world. It is the task of the government to eliminate instability by means of purposive action. According to this thesis, only government activity prevented the collapse of the economy, which was becoming ever more unstable owing to private business policy. The opposite approach regards instability as the delayed effect of former economic policy measures. Theses measures give rise to change anticipation and thus cause the waves of optimism and pessimism. The government, therefore, does not have a stabilizing effect, but contrarily a destabilizing effect on the course of economic activities. Coexistence of the two explanations is quite possible. The evidence of empirical observations, however, is unequivocally in favour of instability being attributable to inconstancy of the government's economic policy. Monetary policy might be cited as an example of the destabilizing effect. There is no such thing as an inflation which is not characterized by a simultaneous or previous, substantial expansion of the quantity of money. An end to inflation could be achieved gradually by reducing the growth rate of the quantity of money. The cost that has to be borne in so doing is the reduction of output and aggravation of underemployment. The proponents of the first approach and also central bank officials, who incidentally find the thesis of the instability of the private sector very attractive because it enables them to shift their responsibility to others, recommend on the other hand that inflation be combated with additional government intervention, e. g. wage and price controls, and a general expansion of the government control system to all spheres of the national economy. Each new intervention by the government gives rise to new instabilities. Consequently there is no justification for massive government intervention; instead a reduction of government activity is indicated. For monetary policy that means: complete abstinence from incisive changes; no policy os sharp expansion and then again sharp contraction; rather moderate but continuous growth at a rate of 3 to 4 %.
Development Trends in the Financial and Credit systems of European Socialist States
The new people's democracies which came into being after World War II took over the financial and credit system of the Soviet Union initially without any great deviations. This system was designed to counter the spreading of market economy conditions and to strengthen the centralization principle in planning procedure. lt soon proved, however, that the system had to be subjected to more or less far-reaching changes, if higher efficiency in economic development were to be attained. In this connection, by no means the least important factors which played a decisive role were the different development levels of the various countries and their particular political situations. In many instances they did not permit strict centralism and resulted in several socialist countries in "mixed' economic conditions which have some centrally planned and some market economy features. In other countries, however, more intensive centralization was attempted with the object of avoiding uncontrolled economic developments. In this connection an important function is performed by the government's budget and the financial system of the "People's Enterprises". In the extreme case there is complete centralization of all financing means in the Central Budget. In the course of development, however, it has proved expedient to allow a certain amount of financial leeway to lower-level public authorities and also to the People's Enterprises. This was intended, above all, to provide standards for the efficiency of the People's Enterprises and an incentive for improving performance. In particular, the make-up of the incentive fund was determined in many instances by considerations as to the manner in which the efficiency of the control system could be improved. In this respect, not the least important consideration was the manner of pricing, and here a trend towards cost prices ("production prices") became manifest. Finally, in some cases experiments were also carried out with a view to improving the efficiency of the control system by fixing the wage fund and allocating investment funds. The further development of the financial and credit system of the socialist states depends on the extent to which the emerging, more or less strong or weak, trends towards making greater allowances for market conditions and towards further decentralization of planning procedure gain acceptance.
Mülhaupt, Ludwig and Küllner, Hermann
Decision-making Problems in Banking
The objective of an optimal structure of assets and liabilities in the banking business could not be obtained with the operating rules practised hitherto. They could not ensure the required liquidity safeguards, nor attainment of the other objectives profitability and security. This is due to the fact that the liquidity problem cannot be considered in isolation, but only in the context of the entire activities of a bank. But for that an overall planning model is required, in which all competing objectives are included. To this end, allowance must be made for the uncertainty of the data by choosing the preference function, which contains the profit and risk aspects, as the objective function and ensuring liquidity by way of constraints. However, even the information provided by a planning model cannot remove the burden of decision-making itself from the bank manager. The model serves merely as preparation for the decision. But the elaboration of models compels clear formulation of the objective, enumeration of the possible alternative courses of action and analysis of the functional relationships in the bank, in order to as certain what effects the possible courses of action in the lending and borrowing business will have on the desired objective. So from the golden rule of banking in the narrow, object-related sense of Huebner, via Wagner's group-related approach already extended by the inactive deposits theorem and the more advanced ideas of Knies and Stuetzel decision-making rules are developing in the direction of formulating models capable of solving questions as to optimal organization of banking activities.
Swiss Experience with Credit Ceilings
In Switzerland the instrument of credit restriction was applied on a voluntary basis, except for the period from 1964 to 1966. Since such voluntary action magnifies the weaknesses inherent in every measure to check economic activity, the Swiss examples can only indicate approximately the effectiveness of this instrument when applied autonomously. In principle, the efficiency of autonomously applied credit restriction should be greater than the efficacy of credit ceilings set on a voluntary basis. In this regard, however, allowance must be made for the general, empirically established fact that the inclination or compulsion to circumvent such restrictions grows disproportionately faster than the growing effectiveness of the cyclical policy checks. Hence, monetary authorities operating with credit restrictions are confronted with an alternative which is fatefully bound up with unconformable means: reduced efficiency or increased official controls. On the other hand, the Swiss examples demonstrate with all clarity that, with the current state of trade cycle statistics and in a small country closely linked with the world economy, direct credit restrictions are not a precision instrument of cyclical policy. The reason lies partly in the inadequate transparency of the interrelationships between bank credit and the remaining monetary magnitudes, and partly in the fact that the setting of credit ceilings in accordance with the bookkeeping practice of continental banks is not based on the credit flow, but on the credit level. Hence the usability of credit restrictions for cyclical policy purposes depends to a decisive extent on the state of development of trade cycle statistics, especially monetary statistics. A thorough and regular analysis of the relationships between bank credit on the one hand and net credit creation, liquidity preference and the domestic quantity of money on the other would be the primary prerequisite for enhancing the efficiency of credit restrictions. The problems are similar in the case of the second source of uncertainty. Due to the fact that credit restrictions are oriented to the credit level instead of the credit flow, the volume of additional credits relevant for current economic activity is an unknown monetary quantity. lf in one period, for example, old bank credits in the amount of 100 are repaid and simultaneously new bank credits are granted in the same amount, there is no change in the level of credits. But the monetary authorities have only vague ideas about the magnitude and temporal distribution of these fluctuations.