Probleme der Indexbindung: Versuch einer Bilanz

Abstract

Index-Linking Problems: A Tentative Stocktaking

This essay ventilates the chief arguments presented in a supplement to Kredit und Kapital (“Problems of Index-Linking”, No. 2, Berlin 1974). In the interests of conciseness, the study abstains from any comprehensive discussion of index-linking and only goes into the related problems affecting wage and salary payments, tax burdens and savings deposits. The main interest is focused on distributive and allocative effects, effects on price movements and on overall economic equilibrium. The arguments advanced by us reduce and blunt the edge of the criticism and scepticism often directed against index-linking. In particular, fears that index clauses would only aggravate the upward trend of prices and drastically diminish the willingness of entrepreneurs to invest are largely unfounded. It is also shown that the various sectors of the economy are affected to varying degrees by the upward price trend. Index clauses, on the other hand, would render it possible to make necessary corrections. This is made clear especially with respect to short- and long-term credit business. The conclusion drawn from our study is that index clauses are certainly no panacea, but nevertheless a useful enrichment of the instruments of trade cycle and structural policy. They could contribute substantially towards combatting inflation and at the same time ameliorate the allocation and distribution disadvantages of the inflationary process.