Monetäres Reinvermögen versus Geldmenge M3 - eine Entgegnung

Net Monetary Assets versus Monetary Supply M3 - A Reply In their article „Monetäres Reinvermögen versus Geldmenge M3“, Neumann and Weigand suggest to the Deutsche Bundesbank that in future, when interest rate policy decisions are being taken, more attention should be paid to the effects of the Bank’s policies on business activity. To measure the impact of monetary policy on economic activity, they advise the Bundesbank to use net monetary assets (Monetäres Reinvermögen) - a concept which they have devised. Contrary to what Neumann and Weigand maintain, however, the predictive quality of this aggregate is unsatisfactory, and its interest weights are theoretically ill substantiated. Another point is that the real net monetary assets cannot be controlled by the central bank. In view of these considerations, any monetary policy strategy along the lines advocated by Neumann and Weigand would rest on a very uncertain foundation. Furthermore, our analyses show that, in contrast to the empirical findings of Neumann and Weigand, a stable demand for money as embodied in M3 can still be identifie