KREDIT und KAPITAL - Issue 1/1982

Contents

Articles

 

Mülhaupt, Ludwig, and Schierenbeck, Henner and Flechsig, Rolf
Die Planung des optimalen Kreditportefeuilles einer Universalbank (I)

 

Becker, Wolf-Dieter
Einige Auswirkungen der Währungspolitik auf den finanziellen Sektor

 

Holtfrerich, Carl-Ludwig
Wechselkurssystem und Philips-Kurve

 

Rose, Manfred
Fiskalpolitik bei aktiver und passiver Zentralbankpolitik

 

Lachmann, Werner

Crowding-out und die Budgetrestriktion des Staates: Eine Kritik

 

Reports

 

Maier, Gerhard

Zur monetären Relevanz von Fremdwährungsguthaben – Bemerkungen zu einem Bericht von Jan Wilhelm Baan und Norbert Kleinheyer

 

Baan, Jan Wilhelm and Kleinheyer, Norbert

Zur monetären Relevanz von Fremdwährungsguthaben – Eine Erwiderung

 

Book Reviews

 

Demopoulos, George D.
Monetary Policy in the Open Economy of Greece (Hans-Hermann Francke)

 

Kloten, N. and Bart, H.-J. and Ketterer, K.-H und Vollmer, R.

Zur Entwicklung des Geldwertes in Deutschland (Charles C. Roberts)


Handwörterbuch der Wirtschaftswissenschaften (Manfred Piel)

 

Von Hayek, F. A.

Entnationalisierung des Geldes. Eine Analyse der Theorie und Praxis konkurrierender Umlaufmittel (Manfred Hieber)

 

Konrad, Alexander

Das Geschäft der Kreditvermittler. Ihre Bedeutung und Stellung am Markt

(Udo Lütteken)

 

Brinkmann, Theodor

Die Determinanten der kurzfristigen Veränderung der funktionellen Einkommensverteilung in der Bundesrepublik Deutschland (Charles C. Roberts)

 

Summaries

 

 

Becker, Wolf-Dieter

„Some Effects of Monetary Policy on the Financial Sector”

 

The first part of the paper deals with monetary effects of current monetary policy arrangements which can be derived from the monetary theory of the balance of payments and purchasing power parity theory. The author reaches the conclusion that the theory of purchasing power parity cannot be applied to the relationship of European currencies to the dollar, because the exchange rate movements are not "independent" (G. Cassel). There can be no question of a failure of the theorem because the prerequisites for its functioning are lacking. In general, therefore, the monetary approach of balance-of-payments theory is applicable and thus there is a direct (international) interrelationship of interest rates. Countries with a relatively low interest rate(and relatively little inflation) become capital-exporting countries in two senses: As preferred lender countries for foreign borrowers, and in consequence of the tendency of domestic investors to switch to countries with a relatively higher nominal interest level. Concrete effects of this circumstance the business policy of the banks are examined in the second part of the paper. In particular, an analysis is undertaken of business policy consequences arising from substitution of the risk of interest rate changes for the exchange rate risk.

 

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Holtfrerich, Carl-Ludwig

“Exchange Rate Systems and the Phillips Curve”

 

The point of departure of this study is the rise in the inflation and/or

unemployment rates in the western industrial countries since the end of the nineteen-sixties, which was also noted in the so-called McCracken report. The more aggressive wage policy of the labour unions since that time has often been highlighted in the scientific debate hitherto as the chief cause of the deterioration of the Phillips relations. The paper seeks an explanation of the change observed worldwide in the unions' aspirations and of the marked labour cost increases in the seventies as a result of wage agreements for which the employers were partly responsible. The erosion of the world monetary system with basically fixed exchange rates, which persisted from the late sixties onwards and culminated in 1973 in a system of basically flexible exchanges rates, is discussed as a possible factor of worldwide impact which influenced the observed change in wage policy. It is shown that the benefit of a stability-oriented wage policy - for the unions with respect to securing full employment and for the employers with respect to improvement of the international competitiveness of theirs firms - must be assigned less weight in the calculations of labour and management where exchange rates are flexible than under a system of fixed exchanged rates. Moreover it is to be expected that the Phillips-curve trade-off in small countries with a large Proportion of foreign trade will be less marked under relatively firm exchange rates than under a regime of flexible exchange rates, because in the former case greater wage and price stability as compared to foreign countries leads above all to additional demand, i. e. to more employment and growth, in the sphere of foreign trade, while in the latter case induces primarily exchange rate movements which tend to offset international differences in stability. These arguments are based on the empirical proof of a marked Philips relation for the economy of the Federal Republic of Germany in the seventies - under the influence of flexible exchanges rates -while no trade-off between Inflation and unemployment rates can be demonstrated for the preceding period.

 

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Rose, Manfred

“Fiscal Policy linked with Active and Passive Central Bank Policy”

 

The theoretical debate on the efficiency of fiscal policy is in need of correction in that it is inadmissible to assume a simultaneous counteracting central bank policy.

 

On the one hand, it is quite evident that the application of different fiscal instruments to achieve various objectives is always most effective in conjunction with a specific central bank policy. Even with the macromodel of extremely simple structure which is here used as a basis, the possibility of greatly diverging effects of fiscal policy under an active central bank policy on the one hand and an extremely passive central bank policy on the other becomes manifest. In this connection it is of substantial importance whether the fiscal authorities orient their action in laying down new combinations of instruments solely to the goods market or simultaneously make allowances for the money market effects of their new activities, that is for all systematic effects of fiscal policy. Considered as a whole, none of the analysed possibilities of active and passive central bank behaviour can be deduced to be invariable macroeconomically advantageous alternatives to a fiscal policy geared to reduction of inflationary effects, securing of full employment and the highest possible national product. This demonstrates once again the necessity of co-ordinating central bank and fiscal policy.

 

Furthermore, it has been shown that tax effects are not - as in the traditional context - related solely to demand for goods. On the contrary, we must reckon with tax schedule changes having a direct effect an the supply of goods, the demand for money and the money supply. This, in turn, gives rise to special systematic effects which depend on the assumed behaviour of the central bank.

 

Lastly, the relevance of value-added-tax modifications could be documented as variations of fiscal Instruments. In the theory of fiscal policy, little attention has been paid so far to such problems at macroeconomic level.

 

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Lachmann, Werner

„Crowding-out and Government Budget Restriction: A Critique“

 

The controversy on whether fiscal policy is a suitable instrument of economic policy for exerting a positive influence on employment has been enriched by the crowding-out debate. In that debate, a distinction must be drawn between real crowding out and financial crowding effects. Following the debate on transaction-cash and portfolio crowding effects - crowding-in is also possible - the significance of budget restriction has been brought to the fore. The fiscal multiplier must then be positive over the long run, otherwise the model of a simply economy would not be stable. From the stability of the observed economic events, conclusions are drawn (with the help of the correspondence principle) with respect to the multiplier. In this article, the significance of the stability constraint is discussed. Causality and the adaption process also have to be examined. It is established that the observed stability of economic events does not necessarily lead to a positive fiscal multiplier (as in the Blinder/Solow theory). An investigation of real crowding out is more relevant than financial crowding out. In a real model, government budget restriction no longer plays a role. The investment multiplier of increased government spending proves to be an important factor. lf that multiplier is positive, price increases occur, which then guarantee real growth. Higher government expenditure coupled with simultaneous combatting of Inflation has an inhibiting effect on the level of employment and may even result in a decline in real income and hence in increased unemployment.

 

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Reports

 

 

Maier, Gerhard

“On the Monetary Relevance of Foreign Currency Deposits”

 

In their proposal concerning money aggregation Baan and Kleinheyer de

not distinguish between domestic and foreign currency, since they add foreign currency deposits of residents to the domestic monetary Aggregates. In this they are neglecting a basic difference which is stressed especially by the new microfoundation of monetary theory. For the new microeconomics, the most essential criterion for the definition of money is, that the use of money should cause the lowest possible costs. On the contrary, the use of foreign currencies does produce relatively high costs; since normally they are not accepted by residents as means of payment and their exchange rate is uncertain. Thus, in a flexible exchange rate system, the residents' foreign currency deposits do not imply any danger for a restricting domestic monetary policy.

 

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Baan, Jan Wilhelm and Kleinheyer, Norbert

„On the Monetary Relevance of Foreign Exchange Credit Balances - A Reply“

 

According to the "functional approach", short-term euro-deposits in the hands of domestic non-bankers should be included in the quantity of money of the country concerned. With this method the efficiency of the monetary policy of that country can be improved. The authors uphold their proposal despite the above criticism by Gerhard Maier.

 

The objection that transactions are necessary in order to use euro-deposits for payments misses the mark in that (a) other assets - also falling within the defined limits of the quantity of money - can likewise be used for payments purposes only by incurring transaction casts, and (b) under certain circumstances euro-deposits can be used for payments in an autonomous international payments system without transaction costs accruing.

 

Maier's second objection, which is based on an unclear definition of euro-deposits, foreign exchange deposits and holdings of notes and coins, is applicable precisely to aggregation methods other than the "functional approach". In contrast, the "functional approach" would lead to a highly significant Definition of the monetary Aggregates, as it takes exact account of the purchasing power in the hands of domestic non-bankers.

 

In conclusion, the authors make tentative estimates of the eurodeposits held by non-bankers, using the examples of the Netherlands and the Federal Republic of Germany.

 

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