Reports
Calendar of Monetary Highlights
Economic Outlook for Austria from 1999 to 2001
Economic Background
Money and Credit in the First Quarter of 1999
Austria’s Major Loans Register in 1998
Balance of Payments for the Year 1998
New Concept of the Austrian Balance of Portfolio Investment
Studies
Harmonized Indices of Consumer Prices – Progress and Unresolved Problems in Measuring Inflation
Consumer prices reflect the price level at the end of the production process and in the economy and may therefore be considered to sum up all inflationary and deflationary price developments in an economy.The Harmonized Index of Consumer Prices (HCPI) gained importance in the run-up to and at the start of Stage Three of EMU. For monetary policy purposes, the Eurosystem relies on the HICP. The monetary strategy of the Eurosystem defines price stability as a year-on-year increase in the HICP of below 2% across the entire euro area.This study relies on Austrian data to show that over a longer period, different concepts in index design may result in substantial divergence in the rates of inflation measured.This applies not only to Austria, but also to the EU. With the HICP, an inflation indicator is now available that meets important fundamental requirements for inflation measurement, namely comparability, elimination of measurement errors by optimizing measurement methods, and timely availability. Despite the progress made sofar, a number of questions still remain unresolved.The basket of goods and services will not be completed until January 2000 (a few services will be integrated even later). Particularly difficult aspects of the underlying methodology – such as the measurement of quality changes and special services in the housing sector – also require further discussion and decisions. Harmonization is also needed in respect of the core inflation indicators, which are important in monetary policy but, for the time being, are used only to a limited extent because of insufficient consistency. Research into the bias in inflation measurement on a common basis might finally help in determining the “true” rate of inflation.
Economic Policy Cooperation in EMU: European Economic Policy Challenges
How to achieve a favorable policy mix in the euro area represents one of the main economic policy challenges EMU faces. Whereas one institution formulates the monetary policy for the entire euro area, the individual EU Member States retain responsibility for most of the other economic policy domains. Given these prerequisites, how can we ensure that economic policy decisions at the different levels do not contradict one another and are instead optimally coordinated? At an international workshop held by the OeNB, the issue of the suitable degree of economic policy coordination was examined.There was a basic consensus that it is necessary to reinforce economic policy cooperation.This requires both a cooperative institutional framework for the interaction between various economic policy agents and these agents’ awareness of their respective roles and responsibilities.
The opinions expressed in the section “Studies” are those of the individual authors and may
differ from the views of the Oesterreichische Nationalbank.