Monetary Discipline, Germany, and the European Monetary System
Inflationsgefahr durch Ãberschreiten von Geldmengenzielen
Vom homo oeconomicus zum homo portofolicus
Meyer zu Selhausen, Hermann
Erfassung und Steuerung des ZinsÃ¤nderungsrisikos einer Bank mit Hilfe eines Modells der Aktiv-Passiv-Koordination
Bieg, Hartmut and RÃ¼bel, Markus
Ausweis und Bewertung von Devisen- und ZinstermingeschÃ¤ften in Bankbilanzen - Teil III
Konstanz Seminar on Monetary Theory and Monetary Policy
Jahresversammlung des Internationalen WÃ¤hrungsfonds und der Weltbank 1988 in West-Berlin
Karmann, Alexander J.
Die permanente Einkommenshypothese â Kritische Analyse einer monetaristischen Position mit Hilfe Ã¶konometrischer Methoden
âMonetary Discipline, Germany, and the European Monetary Systemâ
This paper explores the hypothesis that the non-German members of the European Monetary System (EMS) draw benefits from the system because of the monetary discipline that it imposes upon them. The hypothesis explains the dominant position of Germany in the EMS and is consistent with the evidence that membership has induced several countries to disinflate more than they would have done otherwise. Analysis shows, however, that the required conditions for the hypothesis to work are very stringent. Even if the conditions are met, the non-German members could obtain the advantages of monetary discipline in other ways.
âInflationary Risks as a Result of Overshooting Money Supply Targets?â
Overshooting the Bundesbank's money supply targets for 1986 and 1987 has increased concern about resurging inflation on account of monetary reasons. The monetarist theory claiming the existence of clear causal effects between money supply and the level of prices supplies the context of justification. The aim of this paper is to show that this perception, although offering a consistent picture, is in no way superior to a more Keynesian approach. A procedure oriented to the norm of "accepting existing conditions" promises a rather more relevant analysis than any holding fast to the monetarist norm of "perfect markets". Such an open and more differentiated approach to explaining the causes of inflation - one which assumes a role of relative importance for monetary causes while not denying their existence - thus leads, of necessity, to a more complex decision-making pattern for monetary policy. In this context it is important for the current discussion that the causes of money supply expansion do not indicate inflationary dangers in the present economic environment. Precisely for this reason, monetary policy-makers should not be subjected again to the requirement of strict compliance with money supply targets, but they should review them in principle.
âFrom homo oeconomicus to homo portfolicusâ
On the one hand, this paper attempts to trace the development the theory of portfolio selection has taken over time from its beginnings in the 1950s and mainly in the course of the monetarist redefinition of the theory of money. In that period, the theory of portfolio selection has become one of the mainstays of the neoclassic theory. The paper demonstrates in detail how the homo-oeconomicus rationality traditionally ascribed to market participants has been made more specific and refined by the theory of portfolio selection. The optimization is postulates - offset of marginal rates of return within a widely defined portfolio structure - has resulted in a uniform explanatory approach that is integrating and paradigmatic for neoclassic hermeneutics. On the other hand, this paper discusses the implications and consequences which this metamorphosis from homo oeconomicus to homo portfolicus with highly differentiated modes of behaviour invariably means from a methodical and a cognitive point of view. To what extent - if at all - would it be fair to speak about progress in a cognitive respect? Do the explanatory attempts and, respectively, hypotheses of the theory of portfolio selection meet Popper's scientific approach criterion more strictly in that they are more easily verifiable in empirical terms, even though they may also be rather closer to failure? The paper reaches the conclusion that the theory of portfolio selection may well help prepare more accurate space and time-related hypotheses than is possible hitherto with the traditional procedures. To that extent it would be fair to accord them a greater empirical value in Popper's sense. The necessary econometric analyses aiming for the verification of corresponding hypotheses are, however, still missing for the most part. So is thus their latent confirmation.
Meyer zu Selhausen, Hermann
âRecording and managing a Bank's Interest Variation Risk on the Basis of an Assets/Liabilities Coordination Modelâ
A bank's interest Variation risk has been recorded and managed on the basis of an assets/liabilities coordination model developed in close cooperation with a large German commercial bank. With the help of this model the sensitivity of a bank's interest surplus to sudden and unpredictable changes in the interest scenario has been studied. Furthermore, a proposal has been made for a model-based procedure enabling the bankÂ´ s directors to manage the interest variation risk. Future alternative interest scenarios have been generated in a pragmatic way. The other data required for the model are usually available to commercial banks.
Bieg, Hartmut and RÃ¼bel, Markus
âShowing and Valuation of Forward Exchange and Interest Rate Futures Deals in Bank Balance Sheets - Part IIIâ
The present contribution is the last of a three-part analysis of how forward exchange and interest rate futures operations are treated in the annual financial statements of financial institutions. The two preceding contributions already discussed the shortcomings of the relevant bank balance-sheet recording practices and proposed how exchange and interest rate-dependent positions could be taken on the books. This concept initially represented for positions only that must be taken on the books by Tradition has now been developed further to take care of pending transactions, especially of futures contracts which are the topic discussed in this contribution. This paper shows in what way mutually unfulfilled contracts are to be included in the proposed notes on the accounts and explanatory instruments for forward exchange and interest rate risks (foreign currency and fixed-interest rate levels). Moreover, futures contracts and other pending transactions in the narrower sense should be recorded in the balance sheet itself. However, this is no precondition for the applicability of the overall concept. It can also be applied in a modified, but less illustrative way for balance-sheet readers to the present practice of neglecting pending transactions in balance sheets. Finally, profit and loss statement recording problems are discussed, especially in regard of the time of realization as well as quantification and reporting techniques for unrealized exchange and interest rate gains.
âKonstanz Seminar on Monetary Theory and Monetary Policyâ
The 19. Konstanz Seminar on Monetary Theory and Monetary Policy dealed with the control of the money supply, exchange rate explanations and the scope for deregulation of the old-age pension scheme. The report summarized the eight presented studies and the discussion.
â1988 Combined Annual Meeting of the International Monetary Fund and the World Bank Group in West-Berlinâ
At the end-September 1988 combined annual meeting of the International MoneÂtary Fund (IMF) and the World Bank Group in West-Berlin, the problems encountered by the highly indebted developing nations clearly dominated the scene. This subject kept official participants busy as well as the members of international creditor banks, who were again present in large number, and played a prominent role in the discussions at the periphery of the annual meeting at protest gatherings and public demonstrations. It was the first time that the pros and cons of forgiveness as a contribution to overcoming the financial problems with which the highly indebted developing countries have been struggling for six years were discussed in all frankness at an IMF/ World Bank annual meeting. General satisfaction was expressed at the meeting about the greatly improved economic situation of the industrial countries and about the resultant positive effects on the developing nations. The risks of inflation that have again moved to the foreground as a result were mentioned in a clear manner. One cause for concern among others is the possibility that the reduction of the pronounced external economic imbalances may have begun to falter. The associated risks place high demands on the willingness of individual countries â notably the USA â to take economic policy action and to cooperate internationally. The October 1987 crash on financial markets is still all too fresh on the minds of all concerned.