Volume 217, Issue 2

This paper analyzes the effect of exchange rate variations on the trade structure of the Federal Republic of Germany (FRG) during the period 1982-1991. Major findings of this paper are as follows: 1) With the aggregated trade data, the effect of exchange rate variations on the international competitiveness of the FRG was not detected. 2) Using disaggregated data it is, however, obvious that exchange rate fluctuations had various effects on the competitiveness with regard to commodity groups. 3) The trade of consumer goods was more affected by exchange rate variations than those of other goods. 4) The majority of capital goods belongs to the commodity group, in which the international competitiveness was not affected by exchange rate variations. 5) An exchange rate variation passes through on the prices differently according to commodity groups. It can thus change the international comparative advantage.

Saving through life insurance is heavily subsidized within the German income tax system. We investigate the effect of these tax subsidies on the rate of return of life insurance contracts. We develop a method of separating the savings component of life insurance premiums from their risk component. Using a large cross section data source we calculate household specific rates of return of the savings component taking into account the idiosynchratic variation in the eligibility for the tax subsidies. We find that the tax induced dispersion of the rate of return among households is considerable. However, the tax incentives do not foster the demand for life insurances

Critics of the Bundesbank's monetary policy recently suggested the abandonment of monetary targeting in favour of the term structure of interest rates as the main indicator of central bank policy. However, a term structure oriented policy requires a reliable link between short- and long-term interest rates. Our analysis clearly suggests that there is no stable relationship between German short- and long-term interest rates, in particular not after the German monetary union. Consequently, the empirical results of this paper indicate that this policy has not much chance of success. Zusammenfassung Als Alternative zu einer geldmengenorientierten Politik schlagen Kritiker der Bundesbank vor, die Geldpolitik in stärkerem Maße an der Zinsstruktur auszurichten. Eine zinsstrukturorientierte Geldpolitik erfordert allerdings einen verläßlichen Zusammenhang zwischen kurz- und langfristigen Zinssätzen. Die Ergebnisse der vorliegenden Untersuchung zeigen jedoch, daß in Deutschland von einem stabilen Zusammenhang zwischen kurz- und langfristigen Zinssätzen nicht die Rede sein kann, insbesondere nicht nach der deutschen Währungsunion. Unsere empirischen Ergebnisse sprechen daher eindeutig gegen eine zinsstrukturorientierte Geldpolitik.