Testing for monetary policy effectiveness in Austria: Reply

In a recent article, on the effectiveness of monetary policy in Austria, in this journal Norbert Schuh (1985) makes a number of criticisms of an earlier article on this subject by Driscoll et aL (1983), also published in this journal. Some of these criticisms are unjustified. Schuh's criticisms center on the specification of the money growth equation. He claims that the money growth equation is misspecified because it fails to take into account changes in the regime generating the money supply and some of the institutional features of the money supply process in Austria.