Public Debt Requirements in A Regime of Price Stability

The logic of this paper is based on a modernisation of Austrian capital theory as applied to a closed economy growing in a steady state. Here the philosophy is this: capital is time embodied in produced goods. In steady states, this philosophy works well as an aggregation device for an arbitrary number of distinct produced goods. The basic theorem of this approach (Section VII) is this: in a capital market equilibrium without public debt and hence in a general equilibrium without public debt the average period of production equals the average waiting period of households. Calibration of the parameters of the production sector and the consumption sector then leads to the result that the equilibrium risk free real rate of interest (Wicksell´s "natural rate of interest") is negative for the OECD+China area. What distinguishes the twenty-first century from earlier times is the high life expectancy of people and the ensuing extensive average pension period. These characteristics are responsible for the high average waiting period. Only with a negative real rate of interest can the average period of production catch up with the high average waiting period. Under price stability the risk free real rate of interest cannot become negative. Public debt causes the equilibrium risk free rate of interest to rise: the public debt period () plus the average period of production (DT) equal the average waiting period (Z). Thus substantial public debt is required for the goal of price stability. We thus come to a different view of public debt: it is inconsistent with the goal of a zero public debt. This different view of public debt (even apart from "Keynesian" considerations) has been introduced by Samuelson already in the year 1958. My "Austrian" capital theoretic approach allows me to show that it is the relevant view for the 21 st century.

Risk Financing in Labour Managed Economics: The Commitment Problem

Labour managed firms face some serious problems with regard to the provision of capital, especially of risk-bearing capital. These difficulties are discussed in the first part of the paper. Subsequently it is argued that these problems are rooted in the fact that the workers are insufficiently committed to the long run well-being of the labour managed firm, i.e. in the lacking of a sufficient commitment mechanism. An interchange of the roles which capital and labour play under capitalism would require tradable job rights, an arrangement which is not feasible. It is concluded therefrom that any workable labour managed economy needs a special commitment mechanism. A high rate of unemployment might serve for this purpose, or, more attractively, a reduction of labour mobility through appropriate incentives like seniority-dependent remuneration schemes

Risk Financing in Labour Managed Economics: The Commitment Problem

Labour managed firms face some serious problems with regard to the provision of capital, especially of risk-bearing capital. These difficulties are discussed in the first part of the paper. Subsequently it is argued that these problems are rooted in the fact that the workers are insufficiently committed to the long run well-being of the labour managed firm, i.e. in the lacking of a sufficient commitment mechanism. An interchange of the roles which capital and labour play under capitalism would require tradable job rights, an arrangement which is not feasible. It is concluded therefrom that any workable labour managed economy needs a special commitment mechanism. A high rate of unemployment might serve for this purpose, or, more attractively, a reduction of labour mobility through appropriate incentives like seniority-dependent remuneration schemes.Commitment; labour management; tradable job rights; mobility

Hayek und Keynes: Eine Synthese

In diesem Vortrag möchte ich keineswegs die fundamentalen Unterschiede in der "Philosophie" der beiden Autoren verwischen oder gar leugnen. Mein Anliegen ist der Versuch, gewisse Missverständnisse auszuräumen, die ein Hemmnis im gegenseitigen Verständnis heutiger "Keynesianer" und heutiger "Hayekianer" darstellen. --

Ist der Subtraktionstest ein geeignetes Verfahren zur Ermittlung missbräuchlich überhöhter Netznutzungsentgelte?

Die Arbeit untersucht den von der "Arbeitgruppe Netznutzung Strom der Kartellbehörden des Bundes und der Länder" vorgeschlagenen Subtraktionstest, mit dessen Hilfe missbräuchlich überhöhte Netznutzungsentgelte für die Durchleitung von Strom identifiziert werden sollen. Dabei kommen wir zu einer insgesamt negativen Beurteilung: (1) Die Trennschärfe des Subtraktionstests kann erheblich sinken, wenn ein weiterer Test zur Aufdeckung von Missbrauch vorhanden ist. (2) Der Test führt zu falschen Entscheidungen, wenn die Beschaffungs- und Vertriebskosten falsch gemessen werden. (3) Die mit dem Test verbundenen Verhaltensreaktionen können zu Preiserhöhungen und einer Abschwächung des Kostensenkungswettbewerbs führen

Ist der Subtraktionstest ein geeignetes Verfahren zur Ermittlung missbräuchlich überhöhter Netznutzungsentgelte?

Die Arbeit untersucht den von der ?Arbeitgruppe Netznutzung Strom der Kartellbehörden des Bundes und der Länder? vorgeschlagenen Subtraktionstest, mit dessen Hilfe missbräuchlich überhöhte Netznutzungsentgelte für die Durchleitung von Strom identifiziert werden sollen. Dabei kommen wir zu einer insgesamt negativen Beurteilung: (1) Die Trennschärfe des Subtraktionstests kann erheblich sinken, wenn ein weiterer Test zur Aufdeckung von Missbrauch vorhanden ist. (2) Der Test führt zu falschen Entscheidungen, wenn die Beschaffungs- und Vertriebskosten falsch gemessen werden. (3) Die mit dem Test verbundenen Verhaltensreaktionen können zu Preiserhöhungen und einer Abschwächung des Kostensenkungswettbewerbs führen. --Strommarkt,Netznutzungsentgelte,Missbrauch einer marktbeherrschenden Stellung

Saving and Investment in the Twenty-First Century

The economy of the 21st century in the OECD countries and in China, is characterized by a new phenomenon: the structural surplus of private savings in relation to private investment. This is true even in a situation of prosperity and very low interest rates. On the one hand, this excess saving is due to people's increasing inclination to save in light of rising life expectancy, driven by the desire to have sufficient assets in old age. On the other hand, the demand for capital is not increasing to the same extent, so that investment is not keeping pace with the rising desire to save. The resulting gap between the private desire for wealth and private investment can only be closed by increasing public debt. This open access book offers a new, capital-theoretical perspective on the macroeconomic relationship between desired wealth and investment, and it presents new empirical data on private wealth and its composition in the OECD plus China area. The authors argue that a free economic and social order can only be stabilized if the wealth aspirations of individuals are met under conditions of price stability. This is not possible without substantial net public debt. A new way of thinking about the economy as a whole is required. By way of an in-depth theoretical and empirical analysis, the book demonstrates this new way of thinking and describes the current challenges facing economic policy. It will appeal to economists and students of economics who are interested in macroeconomic theory and its economic policy implications. An impressive, and convincing theoretical dive into the fundamentals behind secular stagnation, with very strong implications for actual debt policy. Public debt may be needed to improve welfare. - Olivier Blanchard, Senior Fellow at the Peterson Institute for International Economics and Professor of Economics Emeritus at Massachusetts Institute of Technology (MIT). Chief Economist at the International Monetary Fund from 2008 to 2015. Saving and Investment in the Twenty-First Century gives a wholly new perspective on macroeconomics. (...) Weiz­säcker and Krämer describe a simple, practical solution to the underemployment that has plagued Southern Europe for more than a decade. - George Akerlof, Nobel Laureate in Economics, 2001. Professor at the McCourt School of Public Policy at Georgetown University and Professor of Economics Emeritus at the University of California, Berkeley. This is a profound and original contribution that can help us to understand and act on the great issues of our times. - Nicholas Stern, Grantham Research Institute on Climate Change and the Environment at the London School of Economics. Author of the Stern Review Report on the Economics of Climate Change. Chief Economist at the World Bank from 2000 to 2003