OeNB Bulletin Q2/25

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• OeNB Bulletin Q2/25 (PDF, 10.2 MB) June 2025

Studies and Analyses

• Changing migration patterns and their relevance to population aging and monetary policy in Europe (PDF, 5.9 MB) Mayrhuber, Raggl, Ramskogler. Geopolitics have always crucially shaped migration patterns, and this effect is likely to increase for the foreseeable future. However, the concrete effects of changing migration patterns on population aging and their potential implications for monetary policy are largely unexplored. Moreover, for many European countries, we do not know much about the specific age distribution of migrants from different origins. This makes it difficult to evaluate how changes in migration patterns might affect the overall age structure in the receiving countries. In this study, we attempt to fill part of this gap by looking at the bilateral age distribution of migration and its potential monetary policy implications. To do so, we first establish that age and its distribution across societies matters in price trends and that migration has always affected the age distribution in Europe by presenting key findings from the literature. Subsequently, we demonstrate the effect that migration has exerted on migration patterns in Europe and, specifically, in Austria by deriving the evolution of counterfactual old-age dependency ratios, demonstrating the proven potential of migration to alleviate population aging-related pressures (provided labor market integration is successful). Finally, we develop a simple and practical method to estimate bilateral age-specific migrant stocks, which can serve as an important foundation for future research and show the way bilateral permeability is shaping the age distribution of migrants. Our paper will thus lay essential foundations for further in-depth research on the interaction of monetary policy and migration. en international migration, population aging, (de)globalization, diversification of migrants F22, F60, J11 Apr 14, 2025, 12:00:00 AM

• A Fiscal Impact Measure for Austria (PDF, 5.7 MB) Moser, Reiss. This study introduces a Fiscal Impact Measure (FIM) based on a novel framework for assessing how discretionary fiscal policies influence GDP growth in Austria. By decomposing revenue and expenditure components, we quantify fiscal impulses relative to rule-based neutral benchmarks, integrating category-specific multipliers from the Austrian Quarterly Model (AQM). Our analysis reveals that fiscal policy largely followed a countercyclical pattern from 1996 to 2020, with consolidation phases post-2009 and expansive responses during the 2008 financial crisis. In contrast, the COVID-19 pandemic led to massive health-related expenditure and energy subsidies that created procyclical stimuli during 2021 and 2022 and a restrictive stance during the 2024 downturn. Our results indicate that household taxes/transfers and public consumption drove a large part of growth impacts historically. The FIM’s granular approach highlights how fiscal rules and crisis responses contribute to macroeconomic outcomes. It thus serves as a tool for policymakers to forecast growth effects amidst evolving EU fiscal governance. en fiscal policy, stimulus, consolidation, fiscal multipliers E60, H60 Apr 17, 2025, 12:00:00 AM

• May the index be with you – measuring the globalization of FDI (PDF, 6.1 MB) Belabed, Mayrhuber. This paper introduces a novel index of the globalization of foreign direct investment (FDI), addressing existing gaps in other indices by incorporating bilateral data and defining three key FDI dimensions: intensity, spread and distance. These dimensions capture the multifaceted nature of FDI globalization, creating a dynamic and responsive tool to monitor cross-border investment trends amidst mounting geopolitical tensions and deglobalization pressures. Leveraging publicly available data from UNCTAD and CEPII, the index minimizes reliance on an extensive set of variables, enhancing its robustness. Empirical findings demonstrate the index's ability to identify structural shifts in FDI patterns over the past two decades, revealing the impact of global crises and geopolitical fragmentation. The overall FDI globalization index increases up until the financial crisis that started in 2008. Following a short period of stagnation, it declines after 2015, which coincides with phases of increasing geopolitical tensions and fragmentation. Compared to other indices, our FDI globalization index provides timely information, offering valuable insights for policymakers that help, for instance, identify vulnerabilities in global FDI networks. en (de)globalization, FDI, geopolitical fragmentation F02, F21, F36 May 14, 2025, 12:00:00 AM

• Geopolitical distance and international trade (PDF, 8.7 MB) Abeliansky, Mayrhuber. Recently, the relationship between geopolitical distance and international trade has gained increasing attention, as rising protectionism in large economies is changing trade patterns and is introducing new barriers to economic exchange. While classical trade theories emphasize the importance of economic fundamentals, such as comparative advantage and factor endowments, in shaping trade patterns, emerging research highlights the role of non-economic factors, including political relations. Using a standard gravity model of trade, we estimate the importance of geopolitical distance, as measured by the ideal point distance calculated by Bailey et al. (2017) based on differences in voting patterns at the UN General Assembly. Results suggest that differences in geopolitical alignment are detrimental to trade, especially so in the last decade. This finding is of particular relevance for emerging economies. Moreover, we find that imports by countries which are geopolitically closely aligned with the US appear to be most sensitive to increases in geopolitical distance. en international trade, geopolitical distance, globalization F1, F5, P0 Jun 27, 2025, 12:00:00 AM