Monetarismus und Keynesianismus in der âNeuen Geldpolitikâ
Hat der Monetarismus versagt?
Orientierungspunkte der Geldpolitik
Kreditfinanzierung versus Steuerfinanzierung der Staatsausgaben â ein langfristiger Vergleich
Frey, Bruno S.
Schattenwirtschaft und Wirtschaftspolitik
Financial Futures: Neue Risiken fÃ¼r die Kreditinstitute?
Bankenaufsichtsziele und Eigenkapitalbegriff
Zehn bankbetriebliche BÃ¼cher
Scharrer, Hans-Eckart und Wessels, Wolfgang (Hrsg.)
Das EuropÃ¤ische WÃ¤hrungssystem â Bilanz und Perspektiven eines Experiments
Gallagher, John Desmond
German-English Translation. Deutsch-englische ÃbersetzungsÃ¼bungen â Lehrbuch mit Texten Ã¼ber Politik und Wirtschaft
Devisenmarktoperationen bei flexiblen Wechselkursen
âMonetarism and Keynesianism in the "New Monetary Policy"â
In contrast to the widespread opinion that the "new monetary policy" introduced in the mid-seventies with the announcement and pursuance of money supply objectives must be regarded as the implementation of monetaristic conceptions, this article supports the view that in important spheres the new policy still has Keynesian traits. The author sets out to demonstrate this with an analysis of the monetary theory and monetary policy conceptions and of the technical handling of money supply control. The first part presents in condensed form the theses of monetarists and Keynesians on the theory of the value of money, and in the second part their theses on the determinants of the degree of employment, confronting them with the new monetary policy. The Keynesian conceptions of the theory of the value of money are considered to consist in the view that on the one hand the central banks assign greater significance to the announcement effect of the money supply target than to the control effect of money supply changes, and on the other hand consider the trend of important individual prices important for determination of the value of money. With respect to economic policy, the author sees Keynesian elements in the circumstance that the central banks by no means orient themselves exclusively to the trend of the value of money, but in making their decisions regard themselves as still constrained by trends in the value of money, the degree of employment and exchange rates. In the discussion of the technical implementation of money supply policy in the third part, the example chosen is the "central bank money supply" conceived by the German Bundesbank. The fact that the "central bank money supply" is an application-oriented magnitude indicates that the object of monetary policy is to take account of, and if necessary offset, reactions and modes of behaviour of the commercial banks and non-bankers. This makes it clear that the proponents of this concept - in contrast to the monetaristic conception of the tendential stability of economic activities - reckon with a certain degree of instability and consider monetary policy as a permanent, discretionary task.
âHas Monetarism Failed?â
The experience of the past four years stimulated once again the debate over macro-theory. The debate involved both the media and the academic establishment. It centered around the question whether "monetarism had failed". The paper addresses this specific issue. In order to assess the problem the major constituent strands of monetarist analysis are summarized. They bear on the nature of the transmission mechanism, the internal stability of the system, the impulse problem, the money supply process and monetary policy, and, lastly, they also bear on crucial aspects of political economy. These five fields cover the central propositions of monetarist analysis to be confronted with the critique. The first level of critique originated in the public arena and the media market. The nature of the failure asserted in this context seems not very clearly related in any way with the crucial propositions advanced. Three topics dominated the discussion and are examined here: the recession of 1981/82, the high level and volatility of interest rates and the definability or controllability of money. The second level of critique emerged in the academic establishment and was mostly advanced by James Tobin. The paper addresses first the narrow focus On "monetarism" poorly related to the range of propositions actually advanced by monetarist analysis. It compares Tobin's assertions with the propositions constituting the characteristic core of monetarist analysis. An old prediction made by Harry Johnson more than ten years ago is also discussed. The paper concludes that Johnson's prediction of the ultimate political failure of monetarism was probably correct but for entirely different reasons than developed by Johnson.
âOrientation Points for Monetary Policyâ
The debate on monetary policy has passed rapidly and lightly over the spectacular successes in combatting inflation in important countries. The new central theme is the "too high real interest rates" and the contribution monetary policy can make towards lowering them. In view of such fluctuating moods, the essay sets out to seek a firm footing for the orientation of monetary policy, i.e. to gauge what knowledge has established and enduring significance for monetary policy and what has not. It is argued that the difficulties with certain intermediate objectives cannot be overcome by using instead a "final objective", e.g. the nominal national product, as an orientation point for monetary policy. The money supply has no real competitor as an intermediate objective; at best, it might be worthwhile to discuss the extent to which other intermediate goals (subordinate to the money supply) could be aimed at in addition. It has proved, however, that there is mostly very little latitude for that. At least for the Federal Republic of Germany, innovations on the financial markets are not considered an obstacle to money supply orientation which, as a defensive strategy, primarily attempts to avoid mistakes and does not take it upon itself to exert ideal control over the economy. In this connection, doubts are expressed and justified with respect to the usefulness of the conventional money demand functions. Finally, the practical problems of money supply control and the accuracy of objectives are dealt with. Here the main interest is focused on the subject of "monetary base control", which is the subject of hot debate especially in the USA and from time to time in Britain, but has not been really mentally digested in West Germany either up to the present.
âCredit Financing versus Tax Financing of Government Expenditures - a long-term comparisonâ
In the long-term comparison of credit financing and tax financing of government expenditures, three indicators are examined: (1) Is the burden of interest tax in the case of credit financing greater than the burden of income tax in the case of tax financing? (2) Are the borrowed funds swallowed up by interest on the debt? (3) Which financing form promises the higher welfare level. As the theoretical study demonstrates, in answering these questions it is advisible to distinguish among three situations.
(1) The private propensity to save, the public borrowing rate (for credit financing) and the income tax rate (for tax financing) are taken as given. In this situation all three indicators tend to give the same recommendation: If the private propensity to save is great (small), credit financing (tax financing) is superior. This result is attributable to the fact that credit financing burdens private savings, while tax financing is a burden primarily on private consumption. Divergent recommendations are conceivable, however, since the critical propensities to save differ from each other.
(2) The private propensity to save, the public borrowing rate (for credit financing) and the income tax rate (for tax financing) are optimal. In this Situation credit financing and tax financing are on a par with each other, regardless of which indicator is considered. The reason is that the optimal propensity to save is correspondingly greater under credit financing than under tax financing. However, there is no cogent argument as to why private households should choose the optimal propensity to save.
(3) The private propensity to save is set at an arbitrary level, while the borrowing rate the income tax rate are optimal. In this Situation there is an optimal combination of credit financing and tax financing which is superior to both pure credit financing and pure tax financing.
Frey, Bruno S.
âShadow Economy and Economic Policyâ
The term "shadow economy" is applied to productive activity not covered by official statistics, which is characterized above all by black-market labour and tax evasion. In recent years it has attracted growing attention among the population and politicians especially of developed industrial countries. Empirical analyses indicate that in the OECD countries the shadow economy is of substantial magnitude and has grown. Widely differing assessments are made of the shadow economy. From the standpoint of economic theory, the advantages and disadvantages of the existence and growth of the shadow economy must be weighed against each other (social cost-benefit analysis) and on that basis advice must be given to politicians. Traditional procedure, however, has little prospect of success because the political process is neglected. An alternative procedure in the sense of a theory of democratic economic policy is proposed.
âFinancial Futures: New Risks for the Banks?â
Futures trading in finance paper with standardized contracts (financial futures) has undergone an extremely dynamic development since its introduction in 1972 â first of all in the USA. The opening of the London International Financial Futures Exchange (LIFFE) in autumn 1982 gave grounds to expect that German banks, too, would take increased interest in the new business possibilities. It was therefore necessary to inquire into whether banks undertaking direct futures commitments might be faced with new and possibly unjustifiable risks. As a rule, financial futures do not involve settlement by delivery on the appointed day, but rather realization of expected, but uncertain interest or exchange rate differences. Since financial futures contracts require only a small capital investment, their leverage with respect to possible profits and losses is considerable. Here lies the enticement but also the risk of financial futures. Because also bank supervision regulations currently do not bar expansion of financial futures trading, a loss potential may be built up, the magnitude of which is not oriented to the risk absorption capability of the banks. And even the institutional arrangements on the futures markets to limit losses do not, in the final analysis, preclude the loss risk. However, it would not be reconcilable with due and proper bank management conclude futures contracts solely with an eye on hoped-for interest and exchange rate changes, that is to say, for speculative purposes. The limiting criteria as between speculative and non-speculative contracts (hedges) are derived. A financial futures contract is non-speculative only when the banking business shown in the balance sheet embodies an interest or exchange rate risk which offsets the financial futures risk. It is thus evident that the conclusion of non-speculative contracts on the financial futures market for German banksâ own account can be considered only to a limited extent. Even when good opportunities for such transactions present themselves, certain residual risks remain. Moreover, hedges involve the same risk of loss as speculative items with respect to the impact on the balance sheet. Furthermore, the handling of futures transactions demands in any case adherence to bank supervision regulations concerning notification and reporting and observance of certain requirements for trading, settlement and control.