Van Horne, James C.
An Inquiry Into Recent Financial Innovations
Dudler, Hermann-Josef
Geldmengenpolitik und Finanzinnovation
Wenzel, H.-Dieter
Ãffentliche Kreditaufnahme und Ãffentliche Investitionen im Wachstumsgleichgewicht
Diller, Klaus Dieter
Die mittelfristigen Zinserwartungen des Bundes
Assenmacher, Walter
Die Dynamik der Inflations- und Beschäftigungsentwicklung. Eine theoretische und ökonometrische Analyse
Schiemann, Jürgen
Wechselkursstabilisierung durch internationale geldpolitische Kooperation. Kritische Anmerkungen zum McKinnon-Vorschlag
Rieke, Wolfgang
Jahrestagung von IWF und Weltbank 1986
Starbatty, Joachim
Die englischen Klassiker der Nationalökonomie. Erträge der Forschung
(Manfred Borchert)
Grebe, Gerhard
Eine ökonometrische Untersuchung des Geldmarktes der Bundesrepublik Deutschland 1969 â 1979
(Michael Burchardt)
Pütz, Paul und Willgerodt, Hans
Gleiches Recht für Beteiligungskapital. Vorschläge zur Reform von Unternehmensrecht und Kapitalmarkt
(Peter Bofinger)
Langhammer, Rolf J. and Spinager, D.
Wirtschaftliche Zusammenarbeit zwischen den Entwicklungsländern
(Manfred Piel)
Van Horne, James C.
âStudy on Financial Innovationsâ
Financial innovations are the result of inefficient and imperfect financial markets. Reduced costs of financial intermediation in the wake of financial innovations help to make the overall allocation of savings capital more efficient. (Examples: development of the Eurodollar market with the consequence of narrowing interest spreads as well as the latest phenomenon of securitization.) Financial innovations also reduce the imperfections of financial markets on which the existing financial instruments are not in a position to meet all the requirements of market participants. On imperfect markets it is possible to obtain higher prices for the satisfaction of such requirements than in perfect markets with balanced competition. (Example: introduction of the zero-bond in the 1980s.)
Financial innovations, which do not increase the efficiency and perfection of financial markets, are without substance in economic terms. They owe their existence to irrational modes of behaviour or excessive speculation by market participants. In the author's opinion, they will always be shortlived.
The causes for the inefficiency and imperfection of financial markets are varied. For example, causes of financial innovations have been regulatory changes, tax law amendments, changes in the level of economic activity, interest and exchange rate modifications, and technological progress, especially in the communications technology.
Enormously increased interest rate and currency risks that cannot be shifted with the requisite ease and cost-effectiveness and are the result of the volatility of interest and exchange rates have resulted in a number of important innovations. Interest and exchange rate swaps, interest rate futures contracts and options have substantially widened the scope for the allocation of such risks. In order to contain the interest rate fluctuation risk, different hedging practices, i.e. interest rate futures contracts and options, are treated in the same way as variable interest rate loans, which carry a maximum interest rate or fluctuate within a maximum margin. With the help of the option price theory, the maximum interest value is reflected as a function of the variability of future interest rates.
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Dudler, Hermann-Josef
âMoney Supply Policy and Financial lnnovationsâ
The large number of new financial instruments, changed modes of financial behaviour, persistent shifts in competitive conditions within the credit industry and the progressing internationalization of financial markets have made a policy of planned and foresighted money supply more difficult in recent years in countries undergoing financial innovation. The present contribution analyses the determinants of the phenomenon of financial innovation, which has become more distinctly visible during the second half of the 1970s, as well as its influence on key parameters of the monetary policy transmission and control processes. It has turned out in this context that important basic relations mainly in Anglo-Saxon countries with their specialized banking institutions and originally strictly regulated financial markets, such as the interest and income elasticity of monetary demand as well as the responsiveness of interest rates to overall economic demand Aggregates, have undergone change and are as difficult to identify in empirical terms as before.
The recent past has not seen any serious structural upheavals in the financial system of the Federal Republic of Germany. The author Attributes this to the broad supply of financial services by the all-purpose-bank system in particular, which has always responded to new needs in an elastic way, to the reduced importance of overall economic disruptions causing innovations, to the liberal German financial regulations, and to the hitherto rather conservative preferences of financial market participants in West Germany. Apart from external economic disruptions, the Deutsche Bundesbank has been able in this stable financial environment until recently to determine reliable money supply indicators and to derive and realize trustworthy annual money supply targets from overall key data.
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Wenzel, H.-Dieter
âDeficit Spending, Public Investment and Growth Equilibriumâ
Subject of this article is the importance of deficit spending and public investment activities for the existence and stability of neoclassical golden rule solutions.
In this context, sufficient and necessary condition for the existence and stability can be derived. One main conclusion is an instability-theorem of deficit-spending if per-capita rules exist for government spending.
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Diller, Klaus Dieter
âMedium Term Interest Rate Expectation of the Federal Governmentâ
The flexibility of the public sector's, including the Federal Government's, budget in future can be crucially impaired by the public sector's debt service obligations. Interest rate payments depend on the contracted debt volume on the one hand and on the level of interest on the other. Parliament decides on future net borrowings and the Federal Ministry of Finance on the level of interest. Since - as a rule - interest rate payments are due at a certain lag, Parliament does not influence the volume of future interest payments when authorizing the amount of net borrowings for the respective year. This means that Parliament does not take account of the effects of such authorization on the budgets of future years.
On the other hand, Parliament has a legitimate interest in being informed on the terms and conditions the Federal Minister of Finance has to accept for his borrowings. For, knowing the "price" of the borrowings might well make the legislative authorities change their minds about the volume of borrowing authorizations they give. However, attempts by Parliament to get from the executive its assumptions concerning interest rates have failed on various occasions.
In spite of its reluctance to furnish such information, the Federal Ministry of Finance - when presenting its five-year financial plan - must, of necessity, provide data from which conclusions can, at least implicitly, be drawn with respect to the interest rates assumed for the plan period. This paper gives an estimation method in this regard. Since it is possible to estimate the executive's medium-term interest rate expectations, initially unknown, there is little point in not furnishing such information from the outset and in withholding it from Parliament.
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Assenmacher, Walter
âThe Dynamism of Inflationary and Employment Trends - A Theoretical and Econometric Analysisâ
It is the aim of the present article to analyse some dynamic relations between inflation and employment. The analytical framework is based on the implications of the original Phillips-Curve and a hypothesis of dynamic price determination. Thus a function between the growth of the inflation rate and the employment rate is introduced. Additional assumptions concerning the sphere of production make it possible to formulate a further relation between the changes in the rates of employment and inflation. Both functions constitute a non-linear first-order differential equations system which shows the interdependence as well as the dynamic structure of inflation and employment. The trajectories and the initial conditions of this system determine the time paths of the economic variables involved. In addition to the trivial solution there exists only one pair of values for the employment and inflation rate, at which both variables remain constant in the course of time. These values are defined as "natural employment or unemployment rate" and as "natural inflation rate". They are both above zero. Only in ease both natural values are realized simultaneously the economy enters a state of constant levels in inflation and employment. As the natural values depend on the structural parameters of the model, they are due to changes in the course of time and they may shift the centres of the trajectories. In that case the time paths of inflation and employment rates assume the form of a loop. Coincidence of such theoretically deduced movements with those observed in reality suggests empirical relevance of the model which is clearly supported by econometrical analysis.
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Schiemann, Jürgen
âStabilising Exchange Rates via International Monetary Cooperation. Critical remarks on the McKinnon proposalâ
In his âInternational Standard for Monetary Stabilizationâ McKinnon proposes a non-inflationary stabilisation of the exchange rates participating in a fixed-exchange-rate system with target zones (USA, Japan and Germany) by means of conÂtrolling the world money supply. Via coordinated and unsterilised exchange market interventions and symmetrical monetary effects McKinnon hopes that with a purely externally oriented money supply policy the differences in interest rate levels will provide the Impulse needed for the stabilisation of exchange rates.
Numerous critical objections indicate that such a fixed-exchange-rate system is not particularly recommendable. As can be shown, in the event of a renunciation of monetary autonomy neither the unrealistic functional and intervention conditions nor the institutional provision of this system with practicable sanctionary mechanisms are able to bring about non-inflationary fixed exchange rates. Furthermore, the McKinnon system is incompatible with the exchange rate and intervention mechanism of the European Monetary System.
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Rieke, Wolfgang
âAnnual Meeting of IMF and the World Bank 1986â
The 1986 joint Annual Meeting of the International Monetary Fund (IMF) and the World Bank was held in Washington from September 30 to October 3, 1986. The main topics at this conference, which was held in a generally constructive spirit, were the world economic situation, the policies necessary to safeguard a satisfactory economic growth and to reduce existing imbalances, the international debt situation as well as the proposals to improve the functioning of the international monetary system.
In this context, the benefits but also the limitations of the use of economic indicators in achieving a better coordination of economic policies of important countries was discussed. There was agreement, that indicators can be a helpful tool, which should be further developed. At the same time, however, the limitations of this instrument were emphasized and it was stressed that indicators must not be used as mechanic triggers for economic policy actions.
The present debt strategy, which has been strengthened since autumn 1985 in the context of the Baker Initiative, was generally endorsed.
The Executive Board of the Fund was asked to continue its studies on the role of the Special Drawing Right in the international monetary system. A new allocation of SDRâs, which was favored by a number of countries, did not find the required broad support.
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