Bundesverfassungsgericht und Krisenpolitik der EZB — Stellungnahmen der Ökonomen

In June 2013, the Federal Constitutional Court in Germany held an expert hearing on the suitability of ECB measures, such as the purchase of government bonds, and their compatibility with existing EU and German legislation. The statements of five invited experts are documented here. The authors comment on the path from the agreement that has laid down the basic rules for the euro area to a crisis-driven approach that seems to have forgotten these rules. The ECB policy holds many risks - above all that of financing public budgets almost without limits - for the stability of monetary and fiscal governance in the euro area. On the other hand, ECB measures can also be interpreted as a necessary means to comply with the ultimate task of the ECB, the defence of price stability. Hence the ECB’s crisis measures do not represent any intention to intervene in fiscal or economic policy measures, and after the crisis the ECB can return to a narrower interpretation of the role of a central bank. It should not be forgotten that the ECB measures bear high risks for the countries in trouble as well as for those countries supporting them.     

A Simple Model of Privately Profitable But Socially Useless Speculation

The paper presents a general equilibrium model of a pure exchange economy with stochastic endowments, in which speculation in the forward market is profitable and stabilizes prices but is useless from a welfare point of view. Reconciling the Siegel paradox with the theory of incomplete markets, we show that banning speculation by closing the forward market may increase social welfare. We also show that the addition of a market might reduce the gains from international trade for all participating countries.
JEL Classification Numbers: F10, F11, F19.     

Die Finanzielle Vorausschau 2007-2013: Grundlage für eine handlungsfähige EU?

Im Dezember 2005 haben sich die Regierungschefs der EU-Mitgliedstaaten auf einen Finanzrahmen für das EU-Budget der Jahre 2007 bis 2013 geeinigt. Wie ist diese Einigung zustande gekommen? Welche Schwerpunkte wurden gesetzt? Wie verteilen sich die Mittelflüsse zwischen Neumitgliedern und den alten Mitgliedstaaten der EU 15? Ist der Finanzrahmen das Ergebnis verkrusteter Entscheidungsstrukturen?     

Weber's Law and the Biological Evolution of Risk Preferences: The Selective Dominance of the Logarithmic Utility Function, 2002 Geneva Risk Lecture

The paper offers a proof that expected utility maximisation with logarithmic utility is a dominant preference in the biological selection process in the sense that a population following any other preference for decision-making under risk will, with a probability that approaches certainty, disappear relative to the population following this preference as time goes to infinity. The result is contrasted with Weber's and Fechner's Psychophysical Law which implies logarithmic sensation functions for objective physical stimuli.     

Agent-based financial markets and New Keynesian macroeconomics: a synthesis

We combine a simple agent-based model of financial markets and a New Keynesian macroeconomic model with bounded rationality via two straightforward channels. The result is a macroeconomic model that allows for the endogenous development of business cycles and stock price bubbles. We show that market sentiments exert important influence on the macroeconomy: Impulse-response functions of macroeconomic variables become more volatile which makes the effect of a given shock hard to predict. We also analyze the impact of different types of financial transaction taxes that are currently debated among policy makers (FTT, FAT, progressive FAT) and find that such taxes are well suited to stabilize the economy and raise funds from the financial sector as a contribution to the enormous costs created during the recent crisis. Our simulations suggest that the FTT leads to higher tax revenues and better stabilization results then the FAT. However, the FTT might also create huge distortion if set too high, a threat which the FAT does not imply.     

Die internationalen auswirkungen nationaler geldpolitischer ma\nahmen

Summary The International Effects of National Monetary Policies. — In this paper, a dynamic two-country model with sluggish price adjustment, flexible exchange rates, perfect capital mobility and rational expectations with respect to the rate of change of the exchange rate is discussed. It is shown that both a once-and-for-all increase in the level of the national money stock and the rate of national monetary growth have no effects on foreign real output and the foreign inflation rate in the long run equilibrium. This result is independent of the degree of wage indexation in the home and foreign country. On the other side, a national monetary growth policy has permanent effects on national output if national nominal wages are not fully indexed. Finally, the problem of international monetary policy coordination is discussed.

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Résumé Les effets internationaux de la politique monétaire nationale. — Dans cette étude on discute un modèle dynamique à deux pays avec un ajustement ralenti des prix, des cours de change flexibles, une mobilité parfaite des capitaux et des expectatives rationnelles concernant le taux des variations du cours de change. Il est montré que le niveau de la quantité de monnaie nationale et le taux de l’accroissement monétaire, augmentés une fois pour toutes, produisent aucun effet sur l’output réel et le taux d’inflation à l’étranger dans l’équilibre à long terme. Ce résultat est indépendant du dégré de l’indexation des salaires au pays d’origine et à l’étranger. De l’autre c?te, une politique de l’accroissement monétaire dans un pays produit des effets permanents sur l’output national si les salaires nationaux nominaux ne sont pas complètement indexés. Enfin, cette étude discute le problème de la coordination internationale de la politique monétaire.

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Resumen Los efectos internacionales de las politicas monetarias nacionales. — Eneste trabajo se discute un modelo dinámico de dos paises con ajuste lento de precios, tasas de cambio flexibles, mobilidad de capital perfecta y expectativas racionales con respecto a los movimientos de la tasa de cambio. Se demuestra que tanto un aumento único del stock nacional de dinero como la tasa de crecimiento de la oferta monetaria no tienen efectos sobre el producto real extranjero y la tasa de inflation extranjera en el equilibrio de largo plazo. Este resultado es independiente del grado de indexación de salarios en ambos paises. Por otro lado, una politica nacional de crecimiento de la oferta monetaria tiene efectos permanentes sobre el producto nacional si los salarios nominales nacionales no están completamente indexados. Al final del trabajo se discute el problema de la coordination internacional de la politica monetaria.

     

Target loans, current account balances and capital flows: the ECB’s rescue facility

This paper presents the first comprehensive Target database of the Eurozone and interprets it from an economic perspective. We show that the Target accounts measure the intra-Eurozone balances of payments and indirectly also international credit given through the Eurosystem in terms of reallocating the ECB’s net refinancing credit. We argue that the Euro crisis is a balance-of-payments crisis similar to the Bretton Woods crisis, and document to what extent the Target credit financed the current account deficits and outright capital flight in Greece, Ireland, Portugal, Spain and Italy. To prevent the ECB from undermining the allocative role of the capital market, we propose adopting the US system of credit redemption between the District Feds.     

Eurowinners and Eurolosers: The distribution of seigniorage wealth in EMU

The European Monetary Union (EMU) will involve socialization of the existing seigniorage wealth of the national central banks. This socialization will create windfall gains for countries with relatively low monetary bases such as France and the UK and it will be disadvantageous for countries like Germany, Austria, Spain or the Netherlands which will suffer per capita wealth losses of between 406 and 182 ecus. The paper quantifies the gains and losses in seigniorage wealth under alternative membership and bank regulation scenarios.