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## Über dieses Buch

Didier LAUSSEL, William MAROIS and Antoine SOUBEYRAN The papers collected in this volume were presented at the "4th International Conference on Monetary Economics and Banking" held in Aix-en-Provence on June 1987 and organized by the C.E.F.I. (Center for International Economics and Finance of the University of Aix-Marseille II) and the GRECO "Monnaie et Financement" of the C.N.R.S. (National Center for Scientific Research). They concern two main topics: monetary theory and monetary policy. In the first one, the contributions provide new insights in some important problems like rational expectations, monetary optimizing models or portfolio choices. In the second one, almost all the texts are devoted to the game-theoretic approach of monetary policy which is a research area mainly developped since about ten years. I. MONETARY THEORY In their well known article on "Recent Developments in Monetary Theory", R. BARRO and S. FISCHER (1976) discussed seven main topics among which "the theory of money demand", "money, inflation and growth", "disequilibrium theory", "rational expectations and the Phillips Curve". Twelve years after, papers of this volume give some new results in these areas or explore new paths of research like a monetary theory of an innovative process of production or the application of the theory of contracts to financial problems.

## Inhaltsverzeichnis

### Speculative Markets and Macroeconomic Controversy

Abstract
During the past decade the areas of macroeconomics, speculative markets and international finance have been characterized by very sharp controversy. The main reason for the controversy is that the “conventional wisdom” has been found to be inconsistent with the empirical evidence. Consequently, the challenge is to formulate a more satisfactory theory. The basic problems in all these areas are interrelated, because of the crucial role of anticipations hypotheses. Recent work in speculative markets in general and, in particular futures markets in commodities, financial instruments, stock indexes and foreign exchange, has profound implications for the microeconomic foundations of macroeconomic controversy. The purpose of this paper is to show how the study of microeconomic markets can evaluate the controversy surrounding the various macroeconomic models.
Jerome L. Stein

### A Neo-Structuralist Model of Inflation and Unemployment

Abstract
On the border between usual macroeconomic theory and development theory, one can find a set of analytical themes which can be more or less bunched to form the structuralist approach to inflation. Although some unity of inspiration can be found in the latino-american works which are so labelled, it does not seem possible to speak of a structuralist theory of inflation, in a proper sense.
Jean-Paul Azam

### Towards a Monetary Theory of a Process of Change

Abstract
The divorce between monetary theory and the analysis of changes in the productive capacity of the economy clearly shows the failure of modern economic theory to integrate real and monetary disequilibria into a proper model. Thus, while contemporary crises call the attention on the radical technological and productive transformations under way, economists seem to go on thinking that the appraisal of the full impacts of monetary phenomena only requires short term analytical frameworks. Schumpeter had already pointed out that: “Modern votaries of Monetary Analysis introduce a most significant restriction they assume the organization and technique of production and the capital equipment as given (in the short run) (...).
Mario Amendola, Jean-Luc Gaffard

### Ruling out Multiple Equilibrium Paths in Monetary Optimizing Models: Necessary and Sufficient Conditions

Abstract
The monetary optimizing model, where a representative consumer, facing parametrically a path of money prices, solves an intertemporal infinite horizon problem and where the equilibrium path of prices is defined by the condition that the exogeneous path of money and consumption goods supplies solves this problem, was first introduced by Brock [1974] in an attempt to provide a justification for the saddle path assumption widely used in monetary rational expectations models. Up to now the literature which evolved from Brock’s original contribution (Obstfeld and Rogoff [1983], Gray [1984], Obstfeld and Rogoff [1986], Obstfeld [1984]) is rather confusing. It has, with the exception of Obstfeld [1984], concentrated on the separable utility function -zero monetary growth case. Even in this simple framework the results have been contradictory and incomplete. The debated question has been the possibility of ruling out divergent price paths. Obstfeld and Rogoff [1983] proved that, in opposition to Brock’s [1974] original conjecture, hyperinflationary paths can’t be ruled out on optimality grounds but gave a condition allowing to rule them out on feasibility grounds.
Didier Laussel, Antoine Soubeyran

### The Optimal Sharing Money-Bond in the Portfolio: The Random Characteristics Approach

Abstract
When CLOVER (1967) establishes the existence of the double constraints in the consumer objective he recalled the double function which is fulfilled by money as medium of exchange (income constraint) and as store of value (expenditure constraint).
Jean-Marie Rousseau

### Debt Contract under Imperfect Information: A Survey

Abstract
The classical analysis in terms of supply and demand appear irrelevant when the problem at hand is related to lending, and to the credit market. The limits that are imposed to the level of a firm’s debt by its creditors, or the effect of a firm’s capital structure on its value are phenomena that would still remain unexplained had the supply-demand analysis been uniquely employed.
Xavier Freixas

### Causal Relations among the Sources of Money Supply the Portuguese Case

Abstract
The global monetary situation of a national economy is usually simply expressed by the following CBS (consolidated banking system) equation:
$$DLX + CLSP + CLEP = M2 + DIV$$
(1)
where DLX is net foreign reserves, CLSP is net credit to the public administrative sector, CLEP is net internal credit to the private sector made up of companies and private individuals, M2 is the volume of monetary assets held by the private sector and DIV are sundry items.
Mario Antao

### Monetary Policy Credibility and Coordination

Abstract
In assessing the appropriate stance of monetary policy, one cannot just rely on the simulated effects of policy in econometric models. In the real world the impact of a given policy change will depend heavily on the state of expectations and the degree of confidence in the monetary authorities. In this regard, Section I of this paper considers some fundamental issues related to the credibility of non-inflationary policies that have received much attention in the recent analytical literature on economic policy. Section II discusses briefly the extent to which the efficacy of monetary policy could be enhanced through international cooperation. More details on these topics can be found in the literature review presented in Section III.
Kevin Clinton, Jean-Claude Chouraqui

### A Folk Theorem of Monetary Policy

Abstract
The analysis of effectiveness and optimality of economic policy by using game theory is a crucial issue of contemporary macroeconomics. International policy coordination and the role of monetary policy are the topics more frequently analysed.
Carlo Carraro

### On the Convergence of Beliefs and Policy to a Rational Expectations Equilibrium in a Dual Policy Problem

Abstract
This paper considers the question of the convergence of expectations and policy in a model of monetary policy with asymmetric and imperfect information between the policy maker and the private sector. In this model the objective function facing the policy maker is non-quadratic because of the manner by which the optimal policy influences the private sector’s expectations. Certainty equivalence does not apply to the optimisation problem and the optimal policy reflects a dual control structure in which the policy maker must take into account both the effect of his policy action on the information set facing the private sector and also on his ability to affect how this information is used when the private sector forms its expectations. Despite this capacity for the policy maker to actively intervene in the expectation formation process of the private sector we show that there is a unique rational expectations equilibrium in the model to which both the expectations of the private sector and the optimal policy converge. In section 2 we introduce the policy problem which is solved analytically in section 3.
Tamer Basar, Mark Salmon

### Public Debt, Inflation and the Coordination of Fiscal and Monetary Policies

Abstract
In most industrial countries two distinct institutions, the central bank and the government, design and implement fiscal and monetary policies. The degree of independence between the central bank and the government varies among countries depending on historical and institutional considerations. For instance the Deutsche Bundesbank and the Federal Reserve Bank have a well established reputation of independence compared to the Bank of England and the Bank of France. But even these latter retain some autonomy in choosing their operating procedures and instruments. Thus the fiction of a single policymaker underlying the traditional approaches to the optimal coordination between fiscal and monetary policies should be abandoned.
Anne Lavigne, Philippe Waechter

### Decentralized Monetary Rules in a Three-Country Model and Time Series Evidence of Structural Dependence

Abstract
Coordination of actions of several policy makers is fraught with difficulties of theoretical and practical nature. To understand the difficulties, it helps to note that policy coordination problems are in essence control problems with multi decision-makers under imperfect and non-identical information patterns. Since policy makers in several countries must act on information sets which are not identical, incomplete and imperfect, pooling or exchange of information may be desirable, were it not for the cost and delays in gathering, exchanging and processing information, or incentives for transmitting false information. Decentralized controls can sidestep some of the costs and delays involved in information exchange since they are control actions based mostly on locally available information, possibly supplemented by information supplied from outside on a few items.
Masanao Aoki

### Fiscal Expectations and Current Account Surplus of the Main OECD Countries

Abstract
For the last fifteen years, the current balance of payments of OECD countries has been marked by deep disequi 1ibria and large scale variations. Thus, for most countries, the current account, the surplus of which amounted to 2% of GDP in 1973, went into deficit and reached 0.8% of GDP in 1985. Furthermore, the divergence in the direction of disequi 1ibria according to the country considered is of course, the most striking phenomenon of the mid-eighties. Indeed, there is a striking contrast between on the one hand, the United States and on the other hand, Germany and Japan. The former have a deficit in excess of 3% of their GNP whereas the latter have a surplus in excess of 4% of their GNP.
Eric Girardin

### The Political Economy of Debt Repudiation and Expropriation in LDCs

Abstract
The LDC debt crisis of the 1980s has mainly been analyzed in terms of the debt-servicing capacity of the major debtor countries, while sovereign risk considerations played only a relatively minor role. In this analysis an attempt is made to address the debt crisis primarily from the sovereign-risk perspective. A dramatical increase of solvency problems from the early 1980s onwards is diagnosed and explained as a counter-intentional consequence of the implementation of cross-default clauses in LDC banking which reduced sovereign risks and made them more manageable. In what follows the basic concept of sovereign risk is described before the main thrust of the analysis is outlined at some length.
Hartmut R. Picht
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