Monetary Policy and the Economy Q3/19

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• Monetary Policy and the Economy Q3/19 (PDF, 1.9 MB) October 2019

Studies and Analyses

• Call for applications: Klaus Liebscher Economic Research Scholarship (PDF, 48 kB) en Oct 11, 2019, 12:00:00 AM

• Nontechnical summaries in English and German (PDF, 104 kB) de en Oct 11, 2019, 12:00:00 AM

• Modest economic downturn in Austria on the back of a slowing global economy (PDF, 710 kB) Fenz, Fritzer, Glatzer, Schneider. Amid weakening global growth, economic activity in Austria has also been slowing down, albeit only moderately thanks to robust domestic demand. Based on the results of its Economic Indicator, the Oesterreichische Nationalbank (OeNB) expects real GDP to expand (quarter on quarter) by 0.2% in the third quarter and by 0.3% in the fourth quarter of 2019. This implies a downward revision of 0.2 percentage points from the OeNB’s Economic Indicator of May 2019. Real GDP is, however, still expected to grow by 1.5% in 2019 as a whole, as real GDP data for the beginning of 2019 have been revised slightly upward.
  In its most recent inflation forecast of September 2019, the OeNB anticipates HICP inflation to decline from 2.1% in 2018 to 1.6% in 2019, and to remain at this level in both 2020 and 2021. Compared with the OeNB’s June 2019 outlook, this represents downward revisions of 0.1 percentage points for each of the years from 2019 to 2021. In 2019, the decline in inflation has been driven by lower energy price inflation, which is masking persistently high wage pressures and robust domestic demand, both of which are not expected to decrease before 2020. As a result, core inflation (excluding food and energy) is projected to reach 1.8% in 2019 and 2.0% in 2020, before dropping to 1.7% in 2021, given the cyclical downturn in Austria. en Oct 11, 2019, 12:00:00 AM

• Equity ratios of Austrian nonfinancial corporations – evidence from balance sheet data (PDF, 459 kB) Beer, Waschiczek. This article analyzes the equity ratios of Austrian nonfinancial corporations using balance sheet data. According to our data, the median equity ratio is about 34%, subject to strong heterogeneity across industries. While companies with a high share of tangible assets tend to have a low equity ratio, we find hardly any link between the share of intangible assets and the equity ratio. Our results suggest that low-tech companies have a lower equity ratio than companies with a higher level of technology intensity. However, high-tech companies do not generally exhibit a higher equity ratio than medium-tech companies. The median equity ratio of start-ups is higher than the overall median equity ratio but lower than the median equity ratio of all high-tech companies. Furthermore, our data suggest that the relationship between firm size and equity ratio is not linear – up to a certain size, the equity ratio decreases with firm size. At least in part, this might be due to the public information available about firms as we find a strong relationship between opaqueness and firm size. Firm age affects the equity ratio only for the first ten years of company life. en corporate finance, capital structure, equity ratio E61, G1, G2, G32 Oct 11, 2019, 12:00:00 AM

• Challenges for measuring inflation in a digital world from a monetary policy perspective (PDF, 304 kB) Ritzberger-Grünwald, Rumler. Apart from having been a major driver of subdued inflation developments in most industrialized countries in the past 10–15 years, recent key megatrends in the retail industry, such as globalization and digitalization, also pose a number of new challenges for measuring inflation. This article discusses possible effects of growing Internet use on prices, inflation and official price statistics. There is some evidence that the growing importance of e-commerce in recent years has had a dampening effect on both online and offline prices, although this effect is likely to be small and only temporary until the spread of the internet has stabilized.
  To account for the changing consumption habits resulting from web retailing, the methods and procedures for inflation measurement have to be adjusted to the new conditions. Systematically collecting data from online retailers (through web scraping) in addition to monitoring prices at brick-and-mortar stores and expanding monitoring to include smaller towns and rural areas would reflect new consumption habits and improve the representativeness of the price index. The use of scanner data directly obtained from retailers, furthermore, would allow for a joint analysis of prices and quantities sold, which in turn helps reduce the substitution bias present in conventional price statistics.
  At the same time, a long-standing issue remains to be solved in inflation measurement: Although the costs of owner-occupied housing account for a considerable share of the total cost of living of households, they are still not included in the consumer price indices of European countries due to methodological complexities. In this respect, experimental evidence indicates that – under normal circumstances – including these costs in official price statistics will most likely not change the euro area inflation figures by much. en digitalization, inflation measurement, owner-occupied housing, scanner data E31, C43 Oct 11, 2019, 12:00:00 AM

• Exploring supply and demand-driven imbalances in Austria’s housing market (PDF, 550 kB) Schneider. This article explores supply and demand imbalances in Austria’s housing market over time. In the period under review, which starts in 1980, excess demand for housing emerged in the early 1990s and peaked in 1993, when demand exceeded the number of available housing units by a number of 41,000. A construction boom in the late 1990s tipped the market back toward excess supply, which rose to 27,000 homes until 1998. By 2016, a combination of shrinking household sizes, rising net migration and weak construction activity had created another peak in excess housing demand, with demand exceeding supply by 65,000 homes. Since 2017, Austria’s housing market has been easing again. Increased construction activity and weaker demand are expected to eliminate backlog demand by 2020. With the growth rates of household numbers decreasing steadily, housing demand will continue to weaken until 2030. en housing market, supply, demand, excess demand R21, R31 Oct 11, 2019, 12:00:00 AM

• European Economic and Monetary Union: The first and the next 20 years (PDF, 202 kB) Balling, Gnan, Warum. Key findings from the OeNB’s 46th Economics Conference in 2019, organized in cooperation with SUERF In the morning of May 2, 2019, more than 400 participants gathered at the Vienna Marriott Hotel for the OeNB’s 46th Economics Conference. This was the second time the conference has been organized in cooperation with SUERF – The European Money and Finance Forum. The conference topic was chosen to mark the 20th anniversary of European monetary union and the euro and thereby offered the opportunity to review the achievements and challenges the euro has brought so far. It also examined the history of the Eurosystem’s monetary policy over the past 20 years, and it discussed the way forward. Several specialized sessions focused on the interaction of various policy areas, notably the interplay between monetary and fiscal stability, monetary and financial stability and the fiscal-financial stability nexus. Three further sessions zoomed in on the international role of the euro, on digital currencies including central bank digital currencies, and on ways how to complete European Economic and Monetary Union (EMU). en Oct 11, 2019, 12:00:00 AM