Monetary Policy and the Economy Q4/07

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• Monetary Policy and the Economy Q4/07 (PDF, 1013 kB) December 2007.

Studies and Analyses

• Growth prospects for Austria are weakening (PDF, 346 kB) Ragacs, Vondra. Ragacs, Vondra – Monetary Policy and the Economy Q4/07 In its economic outlook for Austria of December 2007, the Oesterreichische Nationalbank (OeNB) expects Austria’s real GDP to increase by 3.3% in 2007. In 2008 and 2009, real GDP will grow by 2.5% and 2.3%, respectively. The rate of inflation will rise to 2.1% in 2007 and increase further to 2.4% in 2008 and will decrease again to 1.8% in 2009. Employment growth will remain strong, and the unemployment rate will decrease to 4.2% in 2008. en forecast, Austria. C5, E17 Dec 31, 2007, 12:00:00 AM

• Comparing the Predictive Accuracy of Macroeconomic Forecasts for Austria from 1998 to 2006 (PDF, 328 kB) Ragacs, Schneider. Ragacs, Schneider – Monetary Policy and the Economy Q4/07 This study for the first time presents an analysis of the predictive accuracy of all forecasts available for the Austrian economy. To be precise, the fall 1998 to fall 2006 forecasts of the following three national and three international institutions are compared: the Oesterreichische Nationalbank (OeNB), the Austrian Institute of Economic Research (WIFO), the Institute for Advanced Studies (IHS), the Organisation for Economic Cooperation and Development (OECD), the International Monetary Fund (IMF) and the European Commission. The forecasts of the various institutions tend to paint a relatively similar picture of the economy. As a case in point, all institutions markedly underestimated both the magnitude and the duration of the 2001 slowdown. Credit for the most accurate forecasts is due to the national institutions; none of the international institutions reach or significantly surpass their performance. WIFO posts the smallest error in the GDP forecasts for the current year, the OeNB for the year ahead. The OeNB outperforms all institutions in predicting inflation, recording the smallest mean forecast error. en forecast comparison, predictive accuracy, Austria. C53 Dec 31, 2007, 12:00:00 AM

• Effects of the Full Opening of the Austrian Labor Market to EU-8 Citizens (PDF, 282 kB) Prettner, Stiglbauer. Prettner, Stiglbauer – Monetary Policy and the Economy Q4/07 Within the next few years, Austria will lift its temporary restrictions on the free movement of workers from the EU-8 countries. Estimates of the resulting inflow of foreign labor to Austria are surrounded by a high level of uncertainty and vary widely. A review of the literature and the results of empirical estimations presented in this paper – indicating an expected inflow of some 200,000 immigrant employees within ten years – suggest the following: Immigration will have a small impact on the Austrian labor market at the aggregate level, but may reduce the employability of low-skilled, low-income workers. As regards the impact on inflation, it can be assumed that price pressures will decline. en immigration, labor market effects, European economic integration. J61, E24, R10 Dec 31, 2007, 12:00:00 AM

• The Competitiveness Challenge: EU Member States in International Trade (PDF, 247 kB) Hildebrandt, Silgoner. Hildebrandt, Silgoner – Monetary Policy and the Economy Q4/07 Given the increasing internationalization of trade, it is imperative for any country to ensure that its economy remains competitive. This study sheds light on trends in competitiveness in the EU Member States as made evident in an analysis of various indicators. Having lost their exchange rate autonomy by adopting the euro, the euro area countries face an additional constraint on national economic policy-making in the pursuit of competitiveness. In recent years, diverging unit labor cost developments have left their mark on competitiveness trends in individual euro area countries. Changes in competitiveness should not be interpreted in isolation, but rather against the background of a country’s level of economic development, as evidenced in particular by the EU Member States in Central, Eastern and Southeastern Europe. For instance, long-term catching-up processes and equilibrium price adjustments have a major impact on price competitiveness indicators. The countries of this region managed to tap their potential for catching up and succeeded in withstanding international competition especially by raising product quality. en indicators of international competitiveness, real effective exchange rate, unit labor costs, country comparison in the EU. O52, O57, F15, P20 Dec 31, 2007, 12:00:00 AM

• International Trade and Domestic Growth: Determinants, Linkages and Challenges (PDF, 93 kB) Reiss. Reiss – Monetary Policy and the Economy Q4/07 On September 27, 2007, the Oesterreichische Nationalbank (OeNB), The Vienna Institute for International Economic Studies (wiiw) and the Austrian Federal Economic Chamber held a one-day workshop entitled “International Trade & Domestic Growth: Determinants, Linkages and Challenges.” The workshop aimed at providing a forum for an in-depth discussion of the growth effects of increasing internationalization from theoretical, empirical and institutional perspectives. A number of renowned experts from Austria and abroad participated in the workshop. en economic growth, trade theory and policy, globalization. F10, F43 Dec 31, 2007, 12:00:00 AM