Monetäres Reinvermögen versus Geldmenge M3: Eine Erwiderung

Net Monetary Wealth versus Money Supply M3: A Reply The paper deals with the critique advanced by Clostermann, Scharnagl and Seitz (CSS) against our article „Net Monetary Wealth versus Money Supply M3“. We present evidence refuting the CSS allegation that our former results benefitted from a favorable choice of the sample period. Extending the sample period to include the period after German reunification (1991 to 1996) reinforces our original conclusion: A cointegrating relationship between M3 and GDP (in real terms) does not show up, while net monetay wealth and GDP cointegrate. Thus M3 is not a reliable indicator of potential real effects of monetary policy. Further, we checked the cointegration results presented by CSS relating to the usual money demand function. We found that the existence of a unique cointegrating relationship between M3, GNP and the long-term interest rate is predicated on modelling the deterministic components of the underlying error correction model. Interestingly, even in the approach applied by CSS, real effects of monetary policy are observed in the short run as well as in the long run