Bestandsorientierte Wechselkurstheorien und Wirtschaftspolitik

Abstract

Asset Market-oriented Exchange Rate Theories and Economic Policy

This paper focuses on asset market-oriented exchange rate theories confined to financial assets, on their implications for monetary policy as well as on an extension of such theories that take productive wealth into account. Chapters I and II outline and discuss in a critical manner the purely monetary exchange rate theory as well as the portfolio approach to the determination of exchange rates. The assumptions based on neoclassical notions, the reduction to the short term, the largely waived scope for down-stream adjustment and, especially, the non-consideration of productive wealth within the framework of an international-scale theory of capital investment decisions are the main items subject to criticism. Chapter III extends the financial market approach by including share ownership in productive wealth. In such a model, expansionary monetary policy impulses, currentaccount deficits or increasing public-sector debts may cause exchange rate modifications in the long run that are opposed to the consequences to be drawn from the financial market approach. Exchange rate effects are determined by whether adjustment is confined to financial assets or by whether it includes the non-monetary field and, more specifically, the demand for productive wealth. The exchange rate trend crucially depends on modifications in the expectations for the economy’s performance by international comparison as reflected by current account surpluses/deficits, publicsector surpluses/deficits or monetary policy impulses. The relative market value of real capital has been used as a yardstick for this. It reflects non-monetary processes, i.e. the actual earning power of real capital, as well as expectations based on economic policy measures. International differences in the relative market value of real capital reflecting the expected relative performance of national economies and being the key element in an international-scale theory of capital investment decisionmaking, including productive wealth, is preferred also because empirical studies have shown that dollar rate trend estimates are much more plausible on this basis than on the financial-market approach basis.