Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Friedrich Fritzer Author-Name-First: Friedrich Author-Name-Last: Fritzer Author-Email: friedrich.fritzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7417 Author-Name: Ernst Glatzer Author-Name-First: Ernst Author-Name-Last: Glatzer Author-Email: ernst.glatzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Modest economic downturn in Austria on the back of a slowing global economy Abstract: 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. Pages: 12-24 Year: 2019 Issue: Q3/19 File-URL: https://www.oenb.at/dam/jcr:11834058-730f-4847-a078-20824a37cf03/03_Modest_economic_downturn_PB_MOP_Q319_screen.pdf File-Format: application/pdf File-Size: 710 kb Handle: RePEc:onb:oenbmp:y:2019:i:Q3/19:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Beer Author-Name-First: Christian Author-Name-Last: Beer Author-Email: christian.beer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Walter Waschiczek Author-Name-First: Walter Author-Name-Last: Waschiczek Author-Email: walter.waschiczek@oenb.at. Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Equity ratios of Austrian nonfinancial corporations – evidence from balance sheet data Abstract: 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. Classification-JEL: E61, G1, G2, G32 Keywords: corporate finance, capital structure, equity ratio Pages: 25-41 Year: 2019 Issue: Q3/19 File-URL: https://www.oenb.at/dam/jcr:9a6221ef-5958-44f5-a618-a46d8e0892d9/04_Equity_ratios_PB_MOP_Q319_screen.pdf File-Format: application/pdf File-Size: 459 kb Handle: RePEc:onb:oenbmp:y:2019:i:Q3/19:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Doris Ritzberger-Grünwald Author-Name-First: Doris Author-Name-Last: Ritzberger-Grünwald Author-Email: doris.ritzberger-gruenwald@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-5201 Author-Workplace-Fax: +43-1-40420-5299 Author-Name: Fabio Rumler Author-Name-First: Fabio Author-Name-Last: Rumler Author-Email: fabio.rumler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Title: Challenges for measuring inflation in a digital world from a monetary policy perspective Abstract: 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. Classification-JEL: E31, C43 Keywords: digitalization, inflation measurement, owner-occupied housing, scanner data Pages: 42-53 Year: 2019 Issue: Q3/19 File-URL: https://www.oenb.at/dam/jcr:93516a75-bb8e-4ca3-97c3-2877ae769400/05_Challenges_for_measuring_PB_MOP_Q319_screen.pdf File-Format: application/pdf File-Size: 304 kb Handle: RePEc:onb:oenbmp:y:2019:i:Q3/19:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Exploring supply and demand-driven imbalances in Austria’s housing market Abstract: 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. Classification-JEL: R21, R31 Keywords: housing market, supply, demand, excess demand Pages: 54-71 Year: 2019 Issue: Q3/19 File-URL: https://www.oenb.at/dam/jcr:a2796425-53db-4058-9381-d05441292da3/06_Exploring_imbalances_PB_MOP_Q319_screen.pdf File-Format: application/pdf File-Size: 550 kb Handle: RePEc:onb:oenbmp:y:2019:i:Q3/19:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Morten Balling Author-Name-First: Morten Author-Name-Last: Balling Author-Email: mb@econ.au.dk Author-Workplace-Name: Aarhus University and SUERF Author-Name: Ernest Gnan Author-Name-First: Ernest Author-Name-Last: Gnan Author-Email: ernest.gnan@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7400 Author-Name: Philipp Warum Author-Name-First: Philipp Author-Name-Last: Warum Author-Email: philipp.warum@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Title: European Economic and Monetary Union: The first and the next 20 years Abstract: 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). Pages: 72-83 Year: 2019 Issue: Q3/19 File-URL: https://www.oenb.at/dam/jcr:165a77a7-df86-4bf1-928b-8ed6313069f5/07_European_Economic_and_Monetary_Union_PB_MOP_Q319_screen.pdf File-Format: application/pdf File-Size: 202 kb Handle: RePEc:onb:oenbmp:y:2019:i:Q3/19:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Friedrich Fritzer Author-Name-First: Friedrich Author-Name-Last: Fritzer Author-Email: friedrich.fritzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7417 Author-Name: Fabio Rumler Author-Name-First: Fabio Author-Name-Last: Rumler Author-Email: fabio.rumler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Title: Inflation in Austria since the introduction of the euro Abstract: Given that Austria had already pursued a fixed exchange rate regime with Germany prior to the establishment of European Economic and Monetary Union (EMU), it is unlikely that the inflation process in Austria has changed fundamentally due to the introduction of the euro. Nevertheless, according to the theory of monetary union, inflation rates and price levels should converge in a monetary union in the long run due to greater transparency and the abolition of (formal and informal) trade barriers. In this article, we investigate the inflation process in Austria in the last 20 years by analyzing the inflation-output trade-off, the degree of price flexibility as well as the development of inflation differences and price level convergence in the euro area since 1999. We find that comparatively higher inflation rates of services, in particular of catering services, have been the main reason for the above-average inflation rate in Austria since 2011. Furthermore, we find that the convergence of price levels within the euro area, as measured by the coefficient of variation between national price levels, primarily decreased in the years prior to EMU, but increased after 2007. The latter can be explained by the accession of a number of low price level countries to EMU in the years after its establishment. At the micro level, the degree of flexibility of consumer prices appears to have increased in Austria in the last 20 years, indicating that the macroeconomic frictions induced by price rigidity may have decreased in recent years. Classification-JEL: E31, E52, F45 Keywords: inflation, inflation differences, price level convergence, Phillips curve, price rigidities, Austria Pages: 24-40 Year: 2019 Issue: Q1-Q2/19 File-URL: https://www.oenb.at/dam/jcr:89529d96-ba31-45d9-bd03-8e3938ec5a1d/04_fritzer_rumler_mop_Q1_Q2_19.pdf File-Format: application/pdf File-Size: 783 kb Handle: RePEc:onb:oenbmp:y:2019:i:Q1-Q2/19:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Alfred Stiglbauer Author-Name-First: Alfred Author-Name-Last: Stiglbauer Author-Email: alfred.stiglbauer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7435 Title: Aggregate wage developments in Austria since the introduction of the euro Abstract: Real gross wages per worker have experienced a very subdued development since the introduction of the single currency in Austria. Average hourly wages, on the other hand, have evolved more dynamically. Between 1999 and the Great Recession, the wage share decreased continuously, and wage growth was less than suggested by the “Benya rule.” However, having increased significantly in the aftermath of the crisis, the wage share has been fairly constant in recent years. In 2017, the wage share was only slightly lower compared to that in 1999. The institutional specifics of Austrian wage setting are unique for a developed country (neo-corporatist system, almost complete union coverage and highly coordinated wage setting). Despite declining union density, the system has remained virtually unchanged since the early 1980s. Arguably, joining Economic and Monetary Union (EMU) did not lead to pressures to change the wage bargaining process as Austria had already been part of the “hard currency bloc” in Europe before the introduction of the euro. Phillips curve estimations suggest that nominal wage growth in the past twenty years has been mainly determined by labor productivity and past inflation but has reacted only weakly to the cyclical stance of the economy. In addition, we analyze the effects that structural changes in the labor market and the internationalization of the Austrian economy have had on wage developments. We find evidence that the increased openness of the Austrian economy and changes in participation rates have had a dampening effect on wage growth. In contrast, we find no significant effects for changes in the share of part-time and fixed-term contracts, and in the share of foreign workers. The overall cumulative effect of EMU on wage growth in Austria is estimated to be positive. Classification-JEL: E25, J30, J51 Keywords: wage share, collective bargaining, Austria, monetary union Pages: 41-56 Year: 2019 Issue: Q-1-Q2/19 File-URL: https://www.oenb.at/dam/jcr:be33bee6-6584-4374-9bc0-3ae7a5fd71b2/05_fenz_ragacs_stiglbauer_mop_Q1_Q2_19.pdf File-Format: application/pdf File-Size: 713 kb Handle: RePEc:onb:oenbmp:y:2019:i:Q-1-Q2/19:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Ernest Gnan Author-Name-First: Ernest Author-Name-Last: Gnan Author-Email: ernest.gnan@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7400 Author-Name: Maria Teresa Valderrama Author-Name-First: Maria Teresa Author-Name-Last: Valderrama Author-Email: maria.valderrama@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Name: Walter Waschiczek Author-Name-First: Walter Author-Name-Last: Waschiczek Author-Email: walter.waschiczek@oenb.at. Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Financing conditions in Austria since the introduction of the euro Abstract: How have financing conditions for Austrian firms and households evolved since the start of the euro? To answer this question, we consider Austrian credit, bond and stock markets, estimate a financial conditions index and assess euro rates against a simple hypothetical monetary policy rule for Austria. We find that interest rates for bank loans have fallen since the introduction of the euro, with real interest rates being mostly lower in Austria than in Germany and the euro area average. This was partly related to the high share of variable rate loans, especially for house purchase. However, banks have compensated, at least in part, for lower interest rates by increasing non-interest price elements. Banks have also applied higher collateral requirements and loan covenants since the crisis. The post-crisis expansionary monetary policy conducted by the European Central Bank (ECB) has brought Austrian bond yields below 1% since end-2014. Earnings ratios of ATX companies were mostly below those in the DAX and Euro STOXX50. The stock earnings premium over 10-year government bonds was 2% to 3% in Austria during most of the period under review but rose substantially to around 9% in 2017/2018. A financial conditions index for Austria shows that the transmission of the policy rate through lending rates was an important driver of the tightening of financial conditions prior to and during the financial crisis. In the same way, the transmission of expansionary monetary policy through lending rates and credit risk has contributed to the loosening of financing conditions during the recovery. Judging from a hypothetical monetary policy rule for Austria, the monetary stance given by the euro area rate has been broadly adequate or slightly on the loose side in relation to economic conditions in Austria. Classification-JEL: E43, G21 Keywords: interest rates, credit conditions Pages: 57-70 Year: 2019 Issue: Q1-Q2/19 File-URL: https://www.oenb.at/dam/jcr:4e5a6ff0-7e2a-4177-aa82-2514f6ddf530/06_gnan_valderrama_waschiczek_mop_Q1_Q2_19.pdf File-Format: application/pdf File-Size: 779 kb Handle: RePEc:onb:oenbmp:y:2019:i:Q1-Q2/19:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Walpurga Köhler-Töglhofer Author-Name-First: Walpurga Author-Name-Last: Köhler-Töglhofer Author-Email: walpurga.koehler-toeglhofer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Doris Prammer Author-Name-First: Doris Author-Name-Last: Prammer Author-Email: doris.prammer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Lukas Reiss Author-Name-First: Lukas Author-Name-Last: Reiss Author-Email: lukas.reiss@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: (How) has EMU affected fiscal policy in Austria? Abstract: Since Austria joined the euro area, national budgetary policy has been influenced by EU fiscal rules to a significant extent. Above all, EU fiscal targets were key drivers behind the major consolidation episodes: consolidations either aimed at bringing the headline deficit ratio below 3% of GDP or at moving the structural budget balance closer to the medium-term objective. At the same time, the structure of expenditure and revenue continues to be under full national responsibility. While the revenue structure remained relatively stable over the last 20 years, we observe relatively strong shifts in the expenditure structure towards social transfers in kind. Classification-JEL: E62, H2, H5 Keywords: fiscal rules, fiscal policy, tax and expenditure structure Pages: 71-84 Year: 2019 Issue: Q1-Q2-/19 File-URL: https://www.oenb.at/dam/jcr:0b4f659d-7645-4e75-8dab-04810b8205c7/07_koehler-toeglhofer_prammer_reiss_mop_Q1_Q2_19.pdf File-Format: application/pdf File-Size: 504 kb Handle: RePEc:onb:oenbmp:y:2019:i:Q1-Q2-/19:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Clemens Jobst Author-Name-First: Clemens Author-Name-Last: Jobst Author-Email: clemens.jobst@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Claudia Kwapil Author-Name-First: Claudia Author-Name-Last: Kwapil Author-Email: claudia.kwapil@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: (+43-1) 404 20-7415 Author-Workplace-Fax: (+43-1) 404 20-7499 Title: Monetary policy of the Eurosystem and the OeNB’s balance sheet Abstract: Monetary policy in the euro area is decided by the Governing Council of the European Central Bank (ECB) but implemented through the balance sheets of the 19 national central banks (NCBs) of the Eurosystem. While the consolidated financial statement of the Eurosystem is the primary source of information for monetary policy in the euro area, this article takes the Oesterreichische Nationalbank as an example and argues that a disaggregated view offers additional perspectives. During the financial crisis, the balance sheets of the NCBs reflected to what extent and through which channels national banking systems were affected by the crisis. At the same time, however, NCBs’ balance sheets are driven by structural factors and contingencies completely unrelated to monetary policy. In Austria’s case, for example, the country’s special position in international banknote logistics is the key driving force behind the OeNB’s large liabilities in TARGET2. Overall, we conclude that the NCBs’ balance sheets contain valuable information on both the implementation of monetary policy as well as the operations of the financial and payment system more broadly; nevertheless, the NCBs’ balance sheets must be read with due care. Classification-JEL: E42, E52, E58 Keywords: central bank balance sheet, national central banks in the Eurosystem, monetary policy implementation, TARGET2 Pages: 85-98 Year: 2019 Issue: Q1-Q2/19 File-URL: https://www.oenb.at/dam/jcr:a7354c93-f719-4052-b3f8-63d45ea6b53c/08_jobst_kwapil_mop_Q1_Q2_19.pdf File-Format: application/pdf File-Size: 560 kb Handle: RePEc:onb:oenbmp:y:2019:i:Q1-Q2/19:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Anton Schautzer Author-Name-First: Anton Author-Name-Last: Schautzer Author-Email: anton.schautzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Helmut Stix Author-Name-First: Helmut Author-Name-Last: Stix Author-Email: helmut.stix@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43(1)404-20-7211 Author-Workplace-Fax: +43(1)404-20-7299 Title: Approaching 20 years of euro cash in Austria: What has changed, and what’s next? Abstract: This article discusses how the use of cash has evolved in Austria since euro banknotes and coins were introduced in January 2002 and how the underlying production/logistics processes have changed. Regarding the role of cash in Austria, we show that Austria is among the more cash-intensive economies within the euro area. In general, euro cash has remained an important medium of exchange and store of value. Its overall circulation has increased, in particular after the global economic and financial crisis, both in the euro area as a whole and in Austria. In the context of a growing demand for cash, we discuss how technical progress in the production of euro banknotes and in euro cash logistics has contributed to cost-efficiency. As euro cash is the joint product of all Eurosystem national central banks, we also address the role of the OeNB in the supply of banknotes. Finally, we provide a brief discussion about the likely future of cash. Overall, there are three main messages that can be drawn from our brief contribution. First, euro cash is here to stay, although it is likely that its demand will decline in the coming years, mainly due to innovations in payment technologies and prospective increases in interest rates. Second, cash is not outdated given the technical developments in cash production and dissemination, the continued use of cash by consumers and the costs of cash vis-à-vis other payment means that merchants face. Third, there is a need for more research in order to better understand the demand for cash, in particular referring to those aspects that are unrelated to short-run payment needs. Pages: 99-112 Year: 2019 Issue: Q1-Q2/19 File-URL: https://www.oenb.at/dam/jcr:6050bfa9-7335-4376-bbb2-21bf117f5e98/09_schautzer_stix_mop_Q1_Q2_19.pdf File-Format: application/pdf File-Size: 456 kb Handle: RePEc:onb:oenbmp:y:2019:i:Q1-Q2/19:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Christiane Dorfmeister Author-Name-First: Christiane Author-Name-Last: Dorfmeister Author-Email: christiane.dorfmeister@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Equity Interest and Payments Management Division Title: The euro’s effects on noncash retail payments Abstract: A common European currency, while being a milestone for the European Union, was just the first step toward integrated euro payments markets. The Single Euro Payments Area (SEPA) was not born until 2014, when the migration of domestic formats and national infrastructures for credit transfers and direct debits to European technical standards and procedures was completed. While these changes have of course come at a cost for the financial industry, SEPA has definitely had an impact on the efficiency and speed of retail payments, but also on the security of transactions as well as on pricing. Some issues remain to be solved, e.g. SEPA for card transactions or IBAN discrimination. Nevertheless, SEPA migration has been a success – and, in turn, a stepping stone to further innovations, like instant payments. Pages: 113-123 Year: 2019 Issue: Q1-Q2/19 File-URL: https://www.oenb.at/dam/jcr:8743c128-0974-4670-ba9b-6a6cdd1008ff/10_dorfmeister_mop_Q1_Q2_19.pdf File-Format: application/pdf File-Size: 328 kb Handle: RePEc:onb:oenbmp:y:2019:i:Q1-Q2/19:b:7 Template-Type: ReDIF-Article 1.0 Author-Name: Michaela Posch Author-Name-First: Michaela Author-Name-Last: Posch Author-Email: michaela.posch@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Stefan W. Schmitz Author-Name-First: Stefan W. Author-Name-Last: Schmitz Author-Email: stefan.schmitz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Katharina Steiner Author-Name-First: Katharina Author-Name-Last: Steiner Author-Email: katharina.steiner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Foreign Research Division Author-Name: Eva Ubl Author-Name-First: Eva Author-Name-Last: Ubl Author-Email: Eva.Ubl@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Financial Markets Analysis and Surveillance Division Title: The case for macroprudential policy as a stabilizing tool for the euro area Abstract: Current account deficits are not destabilizing per se and cross-border capital flows can contribute to the economic convergence of the euro area and private risk-sharing if monitored more adequately than provided for by the current macroeconomic governance framework of the European Union. Macroprudential policy could fill this gap. This would allow countries with lower capital stocks to continue importing capital and to strengthen private risk-sharing in the euro area, while avoiding negative side effects, such as excessive credit growth and the risk of a balance of payment crisis. We make a case for broadening the EU’s macroeconomic imbalances procedure (MIP) to include the assessment of the macroprudential stance, particularly with respect to the possible negative side effects of capital inflows. Our argument is inspired by the effective application of macroprudential policy in Austria in the post-World War II era, when Austria featured a structural balance of payment deficit and liberalized both its capital account and its banking sector without a balance of payment crisis. Classification-JEL: E42, E61, F32, F33 Keywords: Macroprudential supervision, capital flows, monetary union Pages: 124-138 Year: 2019 Issue: Q1-Q2/19 File-URL: https://www.oenb.at/dam/jcr:17f55a34-4fc8-401a-8397-9092293e2c4d/11_posch_schmitz_steiner_ubl_mop_Q1_Q2_19.pdf File-Format: application/pdf File-Size: 417 kb Handle: RePEc:onb:oenbmp:y:2019:i:Q1-Q2/19:b:8 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Klaus Vondra Author-Name-First: Klaus Author-Name-Last: Vondra Author-Email: klaus.vondra@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Economic growth slows in Austria as global economy weakens – Economic outlook for Austria from 2019 to 2021 (June 2019) Pages: 139-166 Year: 2019 Issue: Q1-Q2/19 File-URL: https://www.oenb.at/dam/jcr:c064276f-10a8-4285-98f2-3300339648b3/prognose_2019_06_en.pdf File-Format: application/pdf File-Size: 927 kb Handle: RePEc:onb:oenbmp:y:2019:i:Q1-Q2/19:b:9 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: From boom to stable growth in Austria. Economic outlook for Austria from 2018 to 2021 (December 2018) Pages: 10-35 Year: 2019 Issue: Q4/18 File-URL: https://www.oenb.at/dam/jcr:c0b34ecd-10d7-4cf7-ac2c-846f884a5234/Prognose_Dez%202018_EN_screen_1906korr.pdf File-Format: application/pdf File-Size: 591 kb Handle: RePEc:onb:oenbmp:y:2019:i:Q4/18:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Pirmin Fessler Author-Name-First: Pirmin Author-Name-Last: Fessler Author-Email: Pirmin.Fessler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Peter Lindner Author-Name-First: Peter Author-Name-Last: Lindner Author-Email: peter.lindner@oenb.at Author-Workplace-Name: Economic Analysis Division Author-Name: Martin Schürz Author-Name-First: Martin Author-Name-Last: Schürz Author-Email: martin.schuerz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Eurosystem Household Finance and Consumption Survey 2017 for Austria Abstract: This report presents results from the third wave of the Eurosystem Household Finance and Consumption Survey (HFCS) for Austria. The report focuses on the wealth components of the household balance sheet but we also discuss the main findings of the survey in terms of balance sheet robustness. We analyze the pattern of findings that are in line with international results as well as peculiar but stable findings which specifically apply to Austrian households. As the joint distribution of income, consumption and wealth is of particular interest for many international institutions we match the HFCS data with European Union Statistics of Income and Living Conditions (EU-SILC) and with Household Budget Survey (HBS) data. Classification-JEL: D1, D3 Keywords: private wealth, distribution, household, survey, HFCS Pages: 36-66 Year: 2019 Issue: Q4/18 File-URL: https://www.oenb.at/dam/jcr:8b5436a3-72a2-415a-a0b3-ea476c371a0c/4_mop_%20q4_18_screen.pdf File-Format: application/pdf File-Size: 1168 kb Handle: RePEc:onb:oenbmp:y:2019:i:Q4/18:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Friedrich Fritzer Author-Name-First: Friedrich Author-Name-Last: Fritzer Author-Email: friedrich.fritzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7417 Author-Name: Fabio Rumler Author-Name-First: Fabio Author-Name-Last: Rumler Author-Email: fabio.rumler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Austria's economy set to grow by close to 3% in 2018 Abstract: Economic growth in Austria peaked at the end of 2017. The first half of 2018 saw a gradual return to average growth. According to the most recent figures of the OeNB’s Economic Indicator of September 2018, this trend is set to continue in the second half of the year. Based on its quarterly forecasting exercise, the Oesterreichische Nationalbank (OeNB) expects real GDP in Austria to rise by 0.6% in the third quarter and by 0.5% in the fourth quarter of 2018 (quarter on quarter; adjusted for seasonal and working-day effects), and thus to remain above the long-term average growth rate of 0.4% until year-end. Thanks to particularly strong growth early in the year, the predicted growth rate for 2018 as a whole is 2.8%, slightly higher than in 2017. External economic uncertainties such as the further course of international trade conflicts and the Brexit negotiations represent a downside risk to the present forecast. Inflation is expected to remain on a steady course over the next few years. The OeNB forecasts a HICP inflation rate of 2.2% for both 2018 and 2019, followed by a slight decline to 2.0% in 2020. The fact that inflation is set to remain above 2% for the time being can be attributed mainly to favorable economic trends and robust growth in unit labor costs. HICP inflation is not expected to slow until 2020, when crude oil prices are likely to decline. Falling rates of inflation in the energy products market are expected to be largely balanced out by rising inflation rates in the services sector over the forecast horizon. As a result, core inflation (excluding energy and food) is projected to rise from 2.0% in 2018 to 2.3% in 2019 and level off at 2.2% in 2020. Pages: 12-22 Year: 2018 Issue: Q3/18 File-URL: https://www.oenb.at/dam/jcr:82224617-5f81-4468-a251-1efebdc52c54/03_MOP_Q3_18_fenz.pdf File-Format: application/pdf File-Size: 614 kb Handle: RePEc:onb:oenbmp:y:2018:i:Q3/18:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Paul Pichler Author-Name-First: Paul Author-Name-Last: Pichler Author-Email: paul.pichler@oenb.at Author-Workplace-Name: Economic Studies Division, Oesterreichische Nationalbank, Austria Author-Name: Alexander Schierlinger-Brandmayr Author-Name-First: Alexander Author-Name-Last: Schierlinger-Brandmayr Author-Email: alexander.schierlinger-brandmayr@univie.ac.at Author-Workplace-Name: Department of Economics, University of Vienna Author-Name: Martin Summer Author-Name-First: Martin Author-Name-Last: Summer Author-Email: martin.summer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7212 Author-Workplace-Fax: +43-1-40420-7299 Title: Digital money Abstract: We provide a brief overview of the most popular forms of money available to the general public today, with a particular emphasis on digital money. We contrast current monetary arrangements with privately issued crypto coins, such as Bitcoin, and argue why the latter will likely never be able to perform the economic functions of money well. We relate our discussion to the current international debate on the potential introduction of central bank-issued digital currencies as a new form of digital money. Classification-JEL: E5, E58, E50, E59 Keywords: digital money, Bitcoin, blockchain, digitalization Pages: 23-35 Year: 2018 Issue: Q3/18 File-URL: https://www.oenb.at/dam/jcr:ec538ddf-a492-41bc-9e2c-7585878c51b1/04_MOP_Q3_18-pichler.pdf File-Format: application/pdf File-Size: 312 kb Handle: RePEc:onb:oenbmp:y:2018:i:Q3/18:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Wolfgang Pointner Author-Name-First: Wolfgang Author-Name-Last: Pointner Author-Email: wolfgang.pointner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Burkhard Raunig Author-Name-First: Burkhard Author-Name-Last: Raunig Author-Email: Burkhard.Raunig@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7219 Author-Workplace-Fax: +43-1-40420-7299 Title: A primer on peer-to-peer lending: immediate financial intermediation in practice Abstract: Peer-to-peer (P2P) lending markets are young but fast-growing. Furthermore, P2P lending competes with traditional bank lending. Several questions arise: How big are fintech credit markets currently? How do the most common P2P lending models work? What are the risks and who bears them? How do platforms try to mitigate information asymmetries between lenders and borrowers? Who is using P2P platforms? Will P2P lending replace traditional bank lending in the future? This article addresses these issues and summarizes the empirical research on the topic, with a particular focus on developments in Austria. Classification-JEL: G20, G23, G28 Keywords: fintech, peer-to-peer lending, crowd funding, bank lending Pages: 36-51 Year: 2018 Issue: Q3/18 File-URL: https://www.oenb.at/dam/jcr:e4ca857e-1fa8-4820-b4c0-0ef278b8b491/05_MOP_Q3_18_pointner.pdf File-Format: application/pdf File-Size: 237 kb Handle: RePEc:onb:oenbmp:y:2018:i:Q3/18:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Doris Ritzberger-Grünwald Author-Name-First: Doris Author-Name-Last: Ritzberger-Grünwald Author-Email: doris.ritzberger-gruenwald@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-5201 Author-Workplace-Fax: +43-1-40420-5299 Author-Name: Helmut Stix Author-Name-First: Helmut Author-Name-Last: Stix Author-Email: helmut.stix@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43(1)404-20-7211 Author-Workplace-Fax: +43(1)404-20-7299 Title: How Austrians bank and pay in an increasingly digitalized world – results from an OeNB survey Abstract: The digital transformation in banking and payments has important consequences both for the financial industry and for consumers. Nevertheless, there has been limited empirical evidence about the diffusion of financial innovations among consumers in Austria. This paper presents the results of a nationally representative survey. The survey covers questions about how Austrians conduct banking, their use of innovative payment methods and services/products in the realm of financial technologies (fintech) as well as their ownership and awareness of crypto assets. Regression analyses are conducted to identify drivers of adoption of such services and products. The key variables across products are trust in the safety of a product, age, financial risk tolerance and interest in technology. Overall, the results reveal that the way Austrians bank and pay has been changing considerably. In particular, 58% of Austrians aged 14 or over use online banking and 36% use their mobile devices for banking activities. Contactless payments (without entering a PIN) are conducted by roughly one-half of Austrians. The use of several fintech services/products and ownership of crypto assets (2%) is confined to a much smaller share of Austrians. Despite the relatively widespread use of digital banking and payment products/ services, the results also show that a sizeable share of the population does not use innovative financial products, still visits bank branches and has a preference for using cash for daily purchases. Also, an overwhelming majority of Austrians (including those who use financial innovations) want cash to remain. Classification-JEL: E41, G20, O31, O52 Keywords: financial digitalization, banking, payment, fintech, innovations, cash, digital currency, Bitcoin, adoption Pages: 52-89 Year: 2018 Issue: Q3/18 File-URL: https://www.oenb.at/dam/jcr:3df600cb-ce76-4223-af84-9d5783f3146d/06_MOP_Q3_18_ritzberger.pdf File-Format: application/pdf File-Size: 1047 kb Handle: RePEc:onb:oenbmp:y:2018:i:Q3/18:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Ernest Gnan Author-Name-First: Ernest Author-Name-Last: Gnan Author-Email: ernest.gnan@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7400 Author-Name: Claudia Kwapil Author-Name-First: Claudia Author-Name-Last: Kwapil Author-Email: claudia.kwapil@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: (+43-1) 404 20-7415 Author-Workplace-Fax: (+43-1) 404 20-7499 Author-Name: Maria Teresa Valderrama Author-Name-First: Maria Teresa Author-Name-Last: Valderrama Author-Email: maria.valderrama@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Title: Monetary policy after the crisis: mandates, targets, and international linkages Classification-JEL: E58, E61, E65 Keywords: central bank mandate, monetary policy strategy, price stability/inflation target, international monetary policy spillovers, international policy coordination Pages: 8-33 Year: 2018 Issue: Q2/18 File-URL: https://www.oenb.at/dam/jcr:97e32257-4649-4aaa-bb5b-8019707de491/03_mop_2_18_monetary_policy_after_the_crisis.pdf File-Format: application/pdf File-Size: 466 kb Handle: RePEc:onb:oenbmp:y:2018:i:Q2/18:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Michaela Posch Author-Name-First: Michaela Author-Name-Last: Posch Author-Email: michaela.posch@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Stefan W. Schmitz Author-Name-First: Stefan W. Author-Name-Last: Schmitz Author-Email: stefan.schmitz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Peter Strobl Author-Name-First: Peter Author-Name-Last: Strobl Author-Email: Peter.Strobl@oenb.at Title: Strengthening the euro area by addressing flawed incentives in the financial system Classification-JEL: G28, F36 Keywords: financial stability, macroprudential supervision, European monetary union Pages: 34-50 Year: 2018 Issue: Q2/18 File-URL: https://www.oenb.at/dam/jcr:9e0d7b06-1196-48ac-b6c7-5398b2e7e579/04_MOP_2_18_Strengthening%20the%20euro%20area.pdf File-Format: application/pdf File-Size: 341 kb Handle: RePEc:onb:oenbmp:y:2018:i:Q2/18:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Michael Boss Author-Name-First: Michael Author-Name-Last: Boss Author-Email: michael.boss@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Gerald Lederer Author-Name-First: Gerald Author-Name-Last: Lederer Author-Email: gerald.lederer@fma.gv.at Author-Name: Naida Mujic Author-Name-First: Naida Author-Name-Last: Mujic Author-Email: naida.mujic@oenb.at Author-Name: Markus Schwaiger Author-Name-First: Markus Author-Name-Last: Schwaiger Author-Email: markus.schwaiger@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Financial Markets Analysis and Surveillance Division Author-Workplace-Homepage: http://www.oenb.at Title: Proportionality in banking regulation Classification-JEL: G21, G28 Keywords: bank regulation, banking supervision, proportionality Pages: 51-70 Year: 2018 Issue: Q2/18 File-URL: https://www.oenb.at/dam/jcr:d9e8bdcc-fb74-4de0-9c28-af2bf4c00391/05_mop_2_18_proportionality_in_banking_regulation.pdf File-Format: application/pdf File-Size: 505 kb Handle: RePEc:onb:oenbmp:y:2018:i:Q2/18:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Beer Author-Name-First: Christian Author-Name-Last: Beer Author-Email: christian.beer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Walter Waschiczek Author-Name-First: Walter Author-Name-Last: Waschiczek Author-Email: walter.waschiczek@oenb.at. Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Capital markets union: a more diverse financial landscape in the EU? Classification-JEL: E61, G1, G2, G32 Keywords: capital markets union, investment, corporate finance, disintermediation, risk sharing Pages: 71-86 Year: 2018 Issue: Q2/18 File-URL: https://www.oenb.at/dam/jcr:053fb0f5-e413-4f48-8f28-92bea156ab17/06_mop_2_18_capital_markets_union.pdf File-Format: application/pdf File-Size: 495 kb Handle: RePEc:onb:oenbmp:y:2018:i:Q2/18:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Alfred Katterl Author-Name-First: Alfred Author-Name-Last: Katterl Author-Email: alfred.katterl@bmf.gv.at Author-Workplace-Name: Federal Ministry of Finance Author-Name: Walpurga Köhler-Töglhofer Author-Name-First: Walpurga Author-Name-Last: Köhler-Töglhofer Author-Email: walpurga.koehler-toeglhofer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Stabilization and shock absorption instruments in the EU and the euro area – the status quo Classification-JEL: E62, E63, F15, G18, H12 Keywords: EU/euro area, European monetary union, shock prevention and absorption, European fiscal framework, EU budget, ESM, banking union, capital markets union Pages: 87-110 Year: 2018 Issue: Q2/18 File-URL: https://www.oenb.at/dam/jcr:0a5b9f16-3e27-486e-8a71-9dc7286c2aa8/07_mop_2_18_stabilization_and_shock_absorption.pdf File-Format: application/pdf File-Size: 350 kb Handle: RePEc:onb:oenbmp:y:2018:i:Q2/18:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Doris Prammer Author-Name-First: Doris Author-Name-Last: Prammer Author-Email: doris.prammer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Lukas Reiss Author-Name-First: Lukas Author-Name-Last: Reiss Author-Email: lukas.reiss@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: How to increase fiscal stabilization at the euro area level? Classification-JEL: E62, H77 Keywords: fiscal union, fiscal federalism, euro area Pages: 111-131 Year: 2018 Issue: Q2/18 File-URL: https://www.oenb.at/dam/jcr:fe1eeb9e-db4c-43b2-8d42-11adf2d4f051/08_mop_2_18_how_to_increase_fiscal_stabilization.pdf File-Format: application/pdf File-Size: 520 kb Handle: RePEc:onb:oenbmp:y:2018:i:Q2/18:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Karin Fischer Author-Name-First: Karin Author-Name-Last: Fischer Author-Email: k.fischer@bmf.gv.at Author-Name: Alfred Stiglbauer Author-Name-First: Alfred Author-Name-Last: Stiglbauer Author-Email: alfred.stiglbauer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7435 Title: Structural reforms for higher productivity and growth Classification-JEL: E60, E24, O43 Keywords: structural reforms, economic growth, European Union, euro area Pages: 132-152 Year: 2018 Issue: Q2/18 File-URL: https://www.oenb.at/dam/jcr:efab3028-3ffe-4d97-8ead-8555215a4d4d/09_mop_2_18_structural_reforms_for_higher_productivity.pdf File-Format: application/pdf File-Size: 596 kb Handle: RePEc:onb:oenbmp:y:2018:i:Q2/18:b:7 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Author-Name: Klaus Vondra Author-Name-First: Klaus Author-Name-Last: Vondra Author-Email: klaus.vondra@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Robust growth in Austria: economic boom continues in 2018 – Economic outlook for Austria from 2018 to 2020 (June 2018) Pages: 154-179 Year: 2018 Issue: Q2/18 File-URL: https://www.oenb.at/dam/jcr:2b5841c2-f2a7-4d7a-a4ee-d0bde36934ae/10_mop_2_18_robust_growth_in_austria.pdf File-Format: application/pdf File-Size: 578 kb Handle: RePEc:onb:oenbmp:y:2018:i:Q2/18:b:8 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Friedrich Fritzer Author-Name-First: Friedrich Author-Name-Last: Fritzer Author-Email: friedrich.fritzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7417 Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Austria's economy maintains growth momentum in first half of 2018 Pages: 6-13 Year: 2018 Issue: Q1/18 File-URL: https://www.oenb.at/dam/jcr:5125e3ba-66d8-4286-8279-9033f2003be1/02_mop_2018_q1_Fenz_Fritzer_Schneider.pdf File-Format: application/pdf File-Size: 486 kb Handle: RePEc:onb:oenbmp:y:2018:i:Q1/18:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Andrej Cupak Author-Name-First: Andrej Author-Name-Last: Cupak Author-Email: cupak@lisdatacenter.org Author-Workplace-Name: LIS Cross-National Data Center Author-Workplace-Homepage: http://www.lisdatacenter.org/ Author-Name: Pirmin Fessler Author-Name-First: Pirmin Author-Name-Last: Fessler Author-Email: Pirmin.Fessler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Maria Antoinette Silgoner Author-Name-First: Maria Antoinette Author-Name-Last: Silgoner Author-Email: Maria.Silgoner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Elisabeth Ulbrich Author-Name-First: Elisabeth Author-Name-Last: Ulbrich Author-Email: elisabeth.ulbrich@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: https://www.oenb.at/ Title: Financial literacy in Austria: a survey of recent research results Classification-JEL: A20, D14, D91 Keywords: financial literacy, financial education, financial stability, survey data Pages: 14-26 Year: 2018 Issue: Q1/18 File-URL: https://www.oenb.at/dam/jcr:a3752d2a-edf3-438f-9363-92e2c7f1d8a9/03_mop_2018_q1_Cupak_Fessler_Silgoner_Ulbrich.pdf File-Format: application/pdf File-Size: 357 kb Handle: RePEc:onb:oenbmp:y:2018:i:Q1/18:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Austria's thriving economy is fueled by lively exports and strong domestic demand Pages: 6-31 Year: 2017 Issue: Q4/17 File-URL: https://www.oenb.at/dam/jcr:020c2b56-29e5-4908-bdab-eb90b86f2f91/02_mop_2017_q4.pdf File-Format: application/pdf File-Size: 624 kb Handle: RePEc:onb:oenbmp:y:2017:i:Q4/17:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Doris Prammer Author-Name-First: Doris Author-Name-Last: Prammer Author-Email: doris.prammer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Lukas Reiss Author-Name-First: Lukas Author-Name-Last: Reiss Author-Email: lukas.reiss@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Three small essays on public investment: economic rationales, the EU fiscal framework and some statistical comparisons Abstract: Governments undertake public investments for a number of reasons. First, spending on public investment is a means to foster economic growth, in the short run by increasing aggregate demand and in the long run by (potentially) increasing growth potential. Second, public investments can be justified by the presence of market failures. And finally, they can be undertaken due to fairness objectives. Given the growth-enhancing impact of public investment expenditure, the EU has taken several initiatives to increase the low and, during the crisis, falling level of public investment in the EU. Most prominently, an investment clause was introduced into the Stability and Growth Pact (SGP), and the Investment Plan for Europe was launched. This can be considered an (albeit imperfect) substitute for the “golden rule” advocated by its proponents since the launch of the SGP. The ratio of government investment in Austria, at about 3% of GDP, is relatively far above that of Germany (around 2% of GDP), and has recently surpassed the euro area average. However, these figures are somewhat distorted by different sector classifications in the areas of transport, hospitals and municipal services. Classification-JEL: E22, H54 Keywords: public investment, fiscal rules Pages: 32-47 Year: 2017 Issue: Q4/17 File-URL: https://www.oenb.at/dam/jcr:5c776700-bfa1-4826-9ae0-e23b9e08a011/03_mop_2017_q4.pdf File-Format: application/pdf File-Size: 409 kb Handle: RePEc:onb:oenbmp:y:2017:i:Q4/17:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Beer Author-Name-First: Christian Author-Name-Last: Beer Author-Email: christian.beer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Household's housing expenditure in Austria, Germany and Italy Abstract: For many households, housing-related expenditures make up a substantial share of total consumption. This article aims to shed some light on households’ current housing expenses in Austria, Germany and Italy. To this end, we use national data from the 2014 Household Finance and Consumption Survey (HFCS) to calculate the current housing expenditure (the ratio of current housing expenses to household net income). Comparing these three countries we see that the housing expenditure is lowest in Italy, with an average (mean) of 22% (median: 17%), and highest in Germany (mean: 37%, median: 31%). The average housing expenditure in Austria is 29% (median: 26%). In all three countries, the housing expenditure decreases as income and/or wealth increases. The current housing expenditure of tenants is higher than that of homeowners. On average, homeowners’ housing expenditure amounts to 21% in Austria, 31% in Germany and 19% in Italy, whereas the average housing expenditure of tenants is 39% in Austria, 44% in Germany and 36% in Italy. In particular, homeowners without outstanding housing loans have a relatively low current housing expenditure. The difference between the median current housing expenditure of indebted owners and that of owners without debt is 10% in Austria, 17% in Germany and 19% in Italy. Differences across surveys still make international comparisons of housing expenses difficult. However, the availability of HFCS data has improved the situation considerably. Classification-JEL: D14, D31, R21, R38 Keywords: housing costs, housing expenditures, housing finance Pages: 48-61 Year: 2017 Issue: Q4/17 File-URL: https://www.oenb.at/dam/jcr:c72c0625-47f1-4e18-9a98-170e083f2e3a/04_mop_2017_q4.pdf File-Format: application/pdf File-Size: 354 kb Handle: RePEc:onb:oenbmp:y:2017:i:Q4/17:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Friedrich Fritzer Author-Name-First: Friedrich Author-Name-Last: Fritzer Author-Email: friedrich.fritzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7417 Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Austria’s economy will grow by 2¾% in 2017 Abstract: In the first half of 2017, Austria’s economy gathered further momentum. With growth rates by 0.8% in both the first and the second quarters, Austria recorded its strongest economic growth in six years. The broad-based cyclical upswing is being underpinned by both domestic and foreign demand and will continue in the second half of the year. Based on its quarterly forecasting exercise, the Oesterreichische Nationalbank (OeNB) expects real GDP to expand (quarter on quarter) by 0.7% in the third quarter and by 0.6% in the fourth quarter of 2017. For the year as a whole, economic growth in Austria will thus come to 2¾%. Compared with the OeNB’s June 2017 outlook for GDP growth, this implies an upward revision of 0.5%. Distinctly higher growth rates were last recorded in the boom period of 2006 and 2007, when economic growth accelerated to 3½%. Pages: 6–12 Year: 2017 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:08680fa4-a9e8-4f2f-b306-3d9456e7250f/02_Fenz_mop_3_17.pdf File-Format: application/pdf File-Size: 439 kb Handle: RePEc:onb:oenbmp:y:2017:i:3:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Pirmin Fessler Author-Name-First: Pirmin Author-Name-Last: Fessler Author-Email: Pirmin.Fessler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Martin Schürz Author-Name-First: Martin Author-Name-Last: Schürz Author-Email: martin.schuerz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Zur Verteilung der Sparquoten in Österreich Abstract: In der vorliegenden Studie wird das Sparverhalten der privaten Haushalte in Österreich untersucht. In der wirtschaftspolitischen Diskussion wird das Sparen der privaten Haushalte meist anhand des Begriffs der Sparquote des privaten Haushaltssektors besprochen, einem Konzept aus der Volkswirtschaftlichen Gesamtrechnung (VGR). Wir ergänzen diese Betrachtung um eine mikrobasierte Perspektive und liefern empirische Evidenz auf Basis des Household Finance and Consumption Survey (HFCS). Das ermöglicht uns, die Verteilung der Sparquote auf Mikroebene zu betrachten und auf diesem Wege wichtige Informationen zu wirtschaftspolitischen Fragen des Sparens und des Konsums zu erhalten.
Fast ein Viertel der privaten Haushalte in Österreich spart nicht. Die Sparquoten jener Haushalte, die sparen, liegen zwischen 2 % und über 50 % der jeweiligen Haushaltsnettoeinkommen. Die Sparquote steigt mit dem Einkommen stark an. Altersspezifische Zusammenhänge sind kaum zu beobachten, sobald für das Einkommen kontrolliert wird.
In vielen Modellschätzungen und Simulationen mussten aufgrund unzureichender empirischer Schätzungen bislang unterschiedliche Sparquoten bzw. Konsumneigungen für die österreichische Haushaltspopulation angenommen werden. Unsere Studie liefert erstmals Schätzer für Sparquoten über die gesamte Einkommensverteilung in Österreich und informiert über den Zusammenhang zwischen Sparquote und sozioökonomischen Charakteristika der Haushalte. Pages: 13–33 Year: 2017 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:cf4ebb4f-7c74-4764-9e6a-7fd9bfa121a0/03_Fessler_mop_3_17.pdf File-Format: application/pdf File-Size: 680 kb Handle: RePEc:onb:oenbmp:y:2017:i:3:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Beer Author-Name-First: Christian Author-Name-Last: Beer Author-Email: christian.beer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Ernest Gnan Author-Name-First: Ernest Author-Name-Last: Gnan Author-Email: ernest.gnan@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7400 Author-Name: Manuel Mayer Author-Name-First: Manuel Author-Name-Last: Mayer Author-Email: manuel.mayer@oenb.at Author-Name: Martin Summer Author-Name-First: Martin Author-Name-Last: Summer Author-Email: martin.summer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7212 Author-Workplace-Fax: +43-1-40420-7299 Title: The financial system of the future Abstract: Modern economies need a functioning financial system. In principle, the financial system has four main functions: providing a payment system, matching borrowers and lenders, enabling people to manage their personal finances across their lifetimes and between generations, and sharing and managing risk. Despite the implementation of a series of reforms in 2010, including enhanced capital requirements for banks, new banking resolution legislation and the centralization of derivatives markets, the question whether the current financial system is fit for the future remains unanswered. Critics claim that the financial system today is still very similar to what it was before the financial crisis started in 2007. So is the financial system fit for the future? Will its current structure allow it to fulfill its main functions? Do we need further structural changes? If so, what kind of changes? Are tighter banking regulation, an increasing role for shadow banking and the EU’s project of establishing a capital markets union the way to go? What opportunities and potential risks do such changes involve? How will technological developments like FinTech and digital money shape the future financial system? To shed light on these issues, the Oesterreichische Nationalbank (OeNB) joined forces with SUERF – The European Money and Finance Forum to organize its 44th Annual Economics Conference in Vienna on May 29 and 30, 2017, on the topic The Financial System of the Future. Pages: 34–42 Year: 2017 Issue: 10 File-URL: https://www.oenb.at/dam/jcr:9bdcca37-2612-4f1c-9881-a4e9b60ad2cd/04_Beer_Gnan_Mayer_mop_3_17.pdf File-Format: application/pdf File-Size: 147 kb Handle: RePEc:onb:oenbmp:y:2017:i:10:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Klaus Vondra Author-Name-First: Klaus Author-Name-Last: Vondra Author-Email: klaus.vondra@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: 2017 marked by accelerated economic growth and declining unemployment – Economic outlook for Austria from 2017 to 2019 (June 2017) Abstract: Austria’s economy is recovering, with both domestic and foreign demand driving the rebound. Having accelerated by 1.4% in 2016, real GDP is projected to grow by 2.2% in 2017, 1.7% in 2018 and 1.6% in 2019. These figures represent upward revisions of 0.7 and 0.2 and 0.1 percentage points, respectively, versus the OeNB’s December 2016 outlook. The unemployment rate is forecast to decline to 5.4% by 2019 from the historic peak of 6.0% seen in 2016. The inflation rate is expected to rise to 2.0% in 2017 and to reach 1.8% in both 2018 and 2019. Pages: 6-31 Year: 2017 Issue: Q2/17 File-URL: https://www.oenb.at/dam/jcr:750e782e-9b0b-4f13-bd06-753f9d256e04/mop_2017_q2_analyses_ragacs_vondra.pdf File-Format: application/pdf File-Size: 690 kb Handle: RePEc:onb:oenbmp:y:2017:i:Q2/17:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Nicolas Albacete Author-Name-First: Nicolas Author-Name-Last: Albacete Author-Email: Nicolas.Albacete@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Peter Lindner Author-Name-First: Peter Author-Name-Last: Lindner Author-Email: peter.lindner@oenb.at Author-Workplace-Name: Economic Analysis Division Title: How strong is the wealth channel of monetary policy transmission? A microeconometric evaluation for Austria Abstract: We study the magnitude and the sources of wealth effects on consumer spending in Austria by using household-level data from the Austrian Household Finance and Consumption Survey (HFCS) 2010 and 2014. Microdata allow us to investigate whether such effects exist, and if so, whether they are heterogeneous across household groups. We find evidence for a limited but statistically significant positive (long-run) relationship between wealth and consumption in Austria: a EUR 1 increase in gross/net wealth increases mean consumption by 1 cent. We also find that this effect is driven by financial assets for which the marginal propensity to consume is estimated to be around 5 cent. Furthermore, the consumption function is concave in wealth, i.e. the marginal propensity to consume out of wealth is lower for households with more wealth. However, given that in Austria wealth is concentrated in the upper tail of the wealth distribution, the decreasing marginal propensity to consume out of wealth is counterbalanced in the aggregate. Additionally, the marginal propensity to consume out of wealth increases across the consumption distribution. Regarding the various hypotheses discussed in the literature concerning the nature of the correlation between wealth and consumption, for Austria we can find support for the precautionary savings channel only. Classification-JEL: D12, E21, E44, E91 Keywords: wealth effects, consumption, housing, stock ownership Pages: 32-53 Year: 2017 Issue: Q2/17 File-URL: https://www.oenb.at/dam/jcr:0e908656-6385-4486-a437-7ed02c439ea5/mop_2017_q2_analyses_albacete_lindner.pdf File-Format: application/pdf File-Size: 996 kb Handle: RePEc:onb:oenbmp:y:2017:i:Q2/17:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Beer Author-Name-First: Christian Author-Name-Last: Beer Author-Email: christian.beer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Walter Waschiczek Author-Name-First: Walter Author-Name-Last: Waschiczek Author-Email: walter.waschiczek@oenb.at. Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: What is the financial sector’s contribution to the Austrian economy? Abstract: Even though its contribution to the economy has decreased since the onset of the crisis, the Austrian financial sector still accounts for about 4% of value added and about 3% of the labor force. In rendering its services, the financial sector relies on inputs from the real economy, above all legal, accounting, head office and consulting services. In Austria, the domestic financial sector is still the main funding source for the real sector, even if its share has diminished over the past decade, with the decline having been somewhat more distinct on the asset side than on the liability side. For the financial sector, financing the real sector was becoming less relevant until the crisis hit. Classification-JEL: G21, G22 Keywords: financial sector, intermediation, gross value added, Austria Pages: 54-72 Year: 2017 Issue: Q2/17 File-URL: https://www.oenb.at/dam/jcr:31ad8014-4bef-43a6-bfe3-7afb37755a34/mop_2017_q2_analyses_beer_waschiczek.pdf File-Format: application/pdf File-Size: 784 kb Handle: RePEc:onb:oenbmp:y:2017:i:Q2/17:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Ursula Glauninger Author-Name-First: Ursula Author-Name-Last: Glauninger Author-Email: ursula.glauninger@wifo.ac.at Author-Workplace-Name: WIFO Author-Workplace-Homepage: http://www.wifo.ac.at/ Author-Name: Walpurga Köhler-Töglhofer Author-Name-First: Walpurga Author-Name-Last: Köhler-Töglhofer Author-Email: walpurga.koehler-toeglhofer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Thomas Url Author-Name-First: Thomas Author-Name-Last: Url Title: Revised competitiveness indicators for Austria reflect a comparatively stable competitiveness development of the Austrian economy over the longer horizon Abstract: The effect of price/cost competitiveness on national exports and imports, and hence on the current account, is especially important for open economies, in particular for small open economies. In Europe the issue of short-term price/cost competitiveness gained specific prominence after the onset of the global crisis in 2008, although large external imbalances had been identified even before 2008. Across the Eurosystem, various (harmonized) indicators are used to monitor and assess national short-term price/cost competitiveness performance. In Austria, these indicators are compiled by the OeNB in cooperation with WIFO, the Austrian Institute of Economic Research. National competitiveness indicators need to be revised regularly to ensure that they adequately reflect changing country-specific trade patterns, as the reliability of these indicators crucially depends on the weights of individual trading partners. In the current release for Austria, which reflects external trade data for the period from 2010 to 2012, the basic conceptual framework was left unchanged. A comparison of the country weights for six consecutive three-year periods, starting in 1995, that underly the current release highlights the re-orientation of trade flows towards countries that joined the EU in 2004 and 2007 as well as the rising importance of China as a destination for Austrian exports. The current revision of the competitiveness indicators for Austria, as described here, indicates only small variations in Austria’s international competitiveness since 2008. Another purpose of this article is to establish which of the various price/cost competitiveness indicators best reflects our country’s short-term price competitiveness. This is done by estimating standard export and import regressions and comparing the in-sample and out-of-sample fit of models that differ only with respect to the respective real effective exchange rate index. Performance indicators show that models including real effective exchange rates deflated by unit labor costs or by producer prices create comparatively smaller estimation and forecast errors than those using the HICP/CPI. Classification-JEL: C43, F14, F31, F47 Keywords: price and cost competitiveness, effective exchange rates, manufacturing and service Pages: 73-110 Year: 2017 Issue: Q2/17 File-URL: https://www.oenb.at/dam/jcr:d60886aa-b5bb-4122-8acf-2ad6d3b75470/mop_2017_q2_analyses_koehler_url_glauninger.pdf File-Format: application/pdf File-Size: 1135 kb Handle: RePEc:onb:oenbmp:y:2017:i:Q2/17:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Economic upturn fueled by investment and consumer spending – Economic outlook for Austria from 2016 to 2019 (December 2016) Abstract: The Austrian economy is currently experiencing an upturn driven by domestic demand. Real GDP growth will accelerate to 1.4% in 2016 after expanding by less than 1% for four years in a row. This expansion is being fueled by private consumption, which has benefited from the income tax reform that entered into force in January 2016, as well as by investment in equipment. The Oesterreichische Nationalbank (OeNB) projects annual GDP growth of 1.5% for Austria in the period from 2017 to 2019. Notwithstanding robust employment growth, the unemployment rate (Eurostat definition) will climb from 5.7% in 2015 to 6.3% in both 2017 and 2018 and is expected to drop slightly to 6.2% only in 2019. While continuing to remain low at 0.9% in 2016, inflation will accelerate to 1.8% by 2019. Pages: 6-32 Year: 2017 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:6b668420-5d5b-489a-838c-ca9ea31455a5/mop_2017_q1_analyses%20english_Fenz_Schneider.pdf File-Format: application/pdf File-Size: 566 kb Handle: RePEc:onb:oenbmp:y:2017:i:1:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Patricia Walter Author-Name-First: Patricia Author-Name-Last: Walter Title: Anatomy of Austria’s trade in services Abstract: This study analyzes Austrian exports of business services as an indicator of non-price competitiveness in manufacturing before and after world trade collapsed in 2008/09. A unique company dataset was used for this purpose and broken down into individual product/market combinations. The trend analysis differentiates between export growth along the intensive margin (intensifying existing export relations) and along the extensive margin (establishing new export relations). The extensive margin, which signifies export diversification, is more important for the development of manufacturers’ service exports than that of the service sector. This applies in particular to manufacturers that are more technology intensive and it implies that Austrian manufacturers develop know-how to establish new foreign trade relations. After the global trade meltdown, however, manufacturers’ service exports seemed to have primarily helped maintain long-term trade relations, with the extensive margin losing significance. This indicates a worsening of the framework conditions (heightened protectionism) and weak development of foreign trade in goods having a negative impact on service exports. Classification-JEL: F14, L25, L60, L80 Keywords: Competitiveness, diversification, industry studies, international trade, services, specialization Pages: 33-52 Year: 2017 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:1e4120a6-2ffe-4adb-b24d-aebbbce74145/mop_2017_q1_analyses%20english_Walter.pdf File-Format: application/pdf File-Size: 628 kb Handle: RePEc:onb:oenbmp:y:2017:i:1:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Codruta Rusu Author-Name-First: Codruta Author-Name-Last: Rusu Author-Name: Helmut Stix Author-Name-First: Helmut Author-Name-Last: Stix Author-Email: helmut.stix@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43(1)404-20-7211 Author-Workplace-Fax: +43(1)404-20-7299 Title: Von Bar- und Kartenzahlern – Aktuelle Ergebnisse zur Zahlungsmittelnutzung in Österreich Abstract: Der vorliegende Beitrag beleuchtet die Hauptergebnisse einer im Jahr 2016 durchgeführten Zahlungsverhaltensstudie. Die Ergebnisse zeigen, dass sich an der dominanten Rolle von Bargeld (aktuell mit einem Anteil von 82 % an den direkten Zahlungstransaktionen) in den letzten 20 Jahren nichts geändert hat. Konsistent mit den Ergebnissen vorangegangener Studien variiert der Bargeldanteil je nach Betragsklasse, Branche, Zahlungsort und nach soziodemografischen Gruppen. Neben dieser deskriptiven Analyse werden auch Erklärungsansätze für die starke Bargeldnutzung in Österreich diskutiert: eine teilweise geringe Akzeptanz von Zahlungskarten, die Bargeldhaltung sowie die Konsumentenpräferenzen. Insbesondere sagen 55 % der Befragten, dass sie in einem Geschäft vorzugsweise bar zahlen (auch wenn Kartenzahlungen möglich sind), 30 % zahlen lieber mit Karte. Ob jemand eine Bar- oder eine Kartenpräferenz hat, lässt sich nicht allein an soziodemografischen Merkmalen wie Alter, Einkommen, etc. festmachen. Am deutlichsten unterscheiden sich die zwei Gruppen darin, welche Anforderungen an ein Zahlungsmittel gestellt werden. Die diesbezüglichen Ergebnisse zeigen, dass der Bargeldanteil in Österreich auch deshalb so hoch ist, weil Bargeld für die Mehrheit den persönlichen Anforderungen an ein Zahlungsmittel besser gerecht wird als Zahlungskarten. Classification-JEL: E41, D12, E58 Keywords: Bargeld, Konsumentenzahlungen, Zahlungskarten, Geldnachfrage Pages: 54-85 Year: 2017 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:1aac1940-8a93-4f37-be69-8ff90d676f39/mop_2017_q1_analyses%20german_Rusu_Stix.pdf File-Format: application/pdf File-Size: 708 kb Handle: RePEc:onb:oenbmp:y:2017:i:1:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Codruta Rusu Author-Name-First: Codruta Author-Name-Last: Rusu Author-Name: Helmut Stix Author-Name-First: Helmut Author-Name-Last: Stix Author-Email: helmut.stix@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43(1)404-20-7211 Author-Workplace-Fax: +43(1)404-20-7299 Title: Cash and card payments – recent results of the Austrian payment diary survey Classification-JEL: E41, D12, E58 Keywords: cash, consumer payments, payment cards, money demand Pages: 35 Year: 2017 Issue: Q1/17 File-URL: https://www.oenb.at/dam/jcr:d575fb1b-f59c-4a74-8652-1c6e05cd5ce7/Cash-and-card-payments.pdf File-Format: application/pdf File-Size: 435 kb Handle: RePEc:onb:oenbmp:y:2017:i:Q1/17:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Beer Author-Name-First: Christian Author-Name-Last: Beer Author-Email: christian.beer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Christian Alexander Belabed Author-Name-First: Christian Alexander Author-Name-Last: Belabed Author-Name: Andreas Breitenfellner Author-Name-First: Andreas Author-Name-Last: Breitenfellner Author-Email: andreas.breitenfellner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Beat Weber Author-Name-First: Beat Author-Name-Last: Weber Author-Email: beat.weber@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Österreich und die europäische Integration Abstract: Diese Studie diskutiert wirtschaftliche und polit-ökonomische Aspekte der österreichischen EU-Mitgliedschaft. Wir geben einen Überblick über neuere empirische Studien, die Österreich einen durchaus substanziellen kumulativen BIP-Zuwachs der europäischen Integration zuschreiben. Die konkrete Einschätzung der europabezogenen Wachstumsdividende hängt unter anderem von der Integrationsdefinition und dem betrachteten Zeitraum ab. Auch die Auswirkungen auf die Gesamtbeschäftigung sind positiv. Die Effekte auf die Beschäftigung österreichischer Staatsbürger(innen) konnten allerdings ebenso wenig wie Verteilungswirkungen quantifiziert werden. Es muss aber davon ausgegangen werden, dass nicht alle Österreicher( innen) im gleichen Ausmaß von der EU-Mitgliedschaft profitierten und die Mitgliedschaft für einige Bevölkerungsgruppen auch Nachteile brachte, die wohl nicht immer vollständig kompensiert werden konnten. Die niedrige Durchschnittsinflation von 1,8 % seit der Einführung des Euro ist zumindest teilweise auf den Euro zurückzuführen. Die krisenbedingten Maßnahmen der EU haben zudem die Stabilität des österreichischen Bankensystems erhöht. Der österreichische Nettobeitrag von 0,4 % des BIP in das EU-Budget nimmt sich gegenüber den positiven Wachstumseffekten der EU-Mitgliedschaft relativ gering aus. Über die wirtschaftliche Dimension hinaus gewinnt in unsicheren Zeiten die originäre Zielsetzung eines geeinten Europas als Friedensprojekt wieder an Bedeutung. In demokratiepolitischer Hinsicht wird die EU als schrittweiser und naturgemäß nicht perfekter Versuch gesehen, auf zunehmende globale Herausforderungen mit neuen kooperativen Verfahrensformen zu antworten. Classification-JEL: F15, O52 Keywords: Österreich, Europäische Integration, Wirtschaftswachstum Pages: 86-126 Year: 2017 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:6f852aac-aa70-480d-81c7-b3ccca849e04/mop_2017_q1_analyses%20german_Beer.pdf File-Format: application/pdf File-Size: 667 kb Handle: RePEc:onb:oenbmp:y:2017:i:1:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Beer Author-Name-First: Christian Author-Name-Last: Beer Author-Email: christian.beer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Christian Alexander Belabed Author-Name-First: Christian Alexander Author-Name-Last: Belabed Author-Name: Andreas Breitenfellner Author-Name-First: Andreas Author-Name-Last: Breitenfellner Author-Email: andreas.breitenfellner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Beat Weber Author-Name-First: Beat Author-Name-Last: Weber Author-Email: beat.weber@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: EU integration and its impact on Austria Classification-JEL: F15, O52 Keywords: Austria, European integration, economic growth Pages: 38 Year: 2017 Issue: Q1/2017 File-URL: https://www.oenb.at/dam/jcr:464a5af3-1954-4a4c-8206-a9e8198e1aa4/Beer-et-al-2017_EU-integration_impact-AT.pdf File-Format: application/pdf File-Size: 549 kb Handle: RePEc:onb:oenbmp:y:2017:i:Q1/2017:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Beer Author-Name-First: Christian Author-Name-Last: Beer Author-Email: christian.beer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Ernest Gnan Author-Name-First: Ernest Author-Name-Last: Gnan Author-Email: ernest.gnan@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7400 Author-Name: Maria Teresa Valderrama Author-Name-First: Maria Teresa Author-Name-Last: Valderrama Author-Email: maria.valderrama@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Title: A (not so brief ) history of inflation in Austria Abstract: We analyze the eventful history of inflation in Austria over the past two centuries against the background of institutional, economic and political developments. Ultra-high inflation or hyperinflation resulted from repeated monetary financing of war expenses, war-related destruction of productive capacity as well as fear of short-term political and social consequences of anti-inflationary measures. Like other countries, Austria experienced the highest inflation during peaceful times in the 20th century when efforts were made to cushion the negative output effects of oil price shocks. Inflation volatility was high in the 19th century up to the Gründerzeit boom and in the 20th century during the Great Inflation; it was low in the half-century up to World War I and during the Great Moderation. Our frequency domain analysis for the pre-World War I and post-World War II periods finds that, in line with the economic literature, the correlation between money growth and inflation is considerably higher for long and very long frequencies than for business cycle frequencies. The varying correlation between money and inflation reflects changing monetary regimes. We cannot establish a stable empirical Phillips curve relationship; in the post-World War II period, the relationship breaks down once supply shocks (oil prices) are included. Deflation was quite frequent in 19th-century Austria and was not necessarily associated with recessions. By contrast, Austria’s 20th century Great Depression fits the textbook notion of deflation, high unemployment and economic slack. Formal central bank independence did not prevent the erosion of monetary value in “emergency situations” of wars. Hyperinflations and currency reforms repeatedly inflicted substantial and long-lasting damage on citizens’ trust in state money and in the state more generally. Classification-JEL: E58, N13, N14 Keywords: inflation, Austria Pages: 6-32 Year: 2016 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:29752216-a40d-4f34-bf13-0483032a9bf5/mop_2016_q3_in_focus_01_Beer_Gnan_Valderrama.pdf File-Format: application/pdf File-Size: 954 kb Handle: RePEc:onb:oenbmp:y:2016:i:3:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Manfred Fluch Author-Name-First: Manfred Author-Name-Last: Fluch Author-Email: manfred.fluch@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Communications, Planning and Human Resources Department Title: The measurement of inflation in Austria: a historical overview Abstract: Calculation of the first price indices at the international level began as early as the start of the 18th century. In Austria, consumer price indices (CPIs) have been consistently available since 1800. Though simple, the indices followed today’s basic structure, and chaining the various generations of indices allows for conclusions to be drawn on inflation rate trends, adjustments for inflation and indexation for a period now spanning more than 200 years. This article covers a historical period extending from the first calculations of inflation to the complex criteria that determine inflation measurement in Austria today. A historical analysis of the trend in Austrian household expenditures as a key determinant of the basket-of-goods structure of price indices illustrates the long-term shift in spending from basic necessities to upscale goods and services. In 2016, Austrian households are spending only around 25 % of their total expenditure on basic necessities. Over the past 100 years, the number of items in the basket of goods and services has increased 40-fold (from 20 to approximately 800 items), and the number of price reports that are included in the monthly inflation calculations has risen from fewer than 100 to more than 40,000 in 2016. Another point of focus is the causes of measurement inaccuracies – which have always existed in the calculation of inflation – and the methods for correcting them. Austria’s accession to the EU and, subsequently, Economic and Monetary Union (EMU) with its supranational monetary policy instigated a process of restructuring and, more importantly, harmonizing inflation measurement. The Harmonised Index of Consumer Prices (HICP), which has been computed since 1996 to supplement the national indices, is now the primary indicator of inflation under the Eurosystem’s monetary policy strategy. Finally, this article concludes with a discussion of the measurement factors required to be used in the calculation of the Austrian CPI and HICP under EU law as well as the conceptual differences still existing between these two inflation parameters. Classification-JEL: B10, E31, N3 Keywords: History of inflation measurement, Austria Pages: 33-60 Year: 2016 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:8696fbb8-0ca5-4348-affb-7b7e057d2fd2/mop_2016_q3_in_focus_02_Fluch.pdf File-Format: application/pdf File-Size: 398 kb Handle: RePEc:onb:oenbmp:y:2016:i:3:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Heinz Handler Author-Name-First: Heinz Author-Name-Last: Handler Title: Two centuries of currency policy in Austria Abstract: This paper is devoted to currency policies in Austria over the last 200 years, attempting to sketch historical developments and uncover regularities and interconnections with macroeconomic variables. While during the 19th century the exchange rate resembled a kind of technical relation, since World War I (WW I) it has evolved as a policy instrument with the main objectives of controlling inflation and fostering productivity. During most of the 200-year period, Austrian currencies were subject to fixed exchange rates, in the form of silver and Gold standards in the 19th century, as a gold-exchange standard and hard currency policy in much of the 20th century, and with the euro as the single currency in the early 21st century. Given Austria’s euro area membership, national exchange rate policy has been relinquished in favor of a common currency which itself is floating vis-à-vis third currencies. Austria’s predilection for keeping exchange rates stable is due not least to the country’s transformation from one of Europe’s few great powers (up to WW I) to a small open economy closely tied to the large German economy. Classification-JEL: E58, F31, N13, N14, N23, N24 Keywords: currency history, exchange rate policy, central bank, Austria Pages: 61-76 Year: 2016 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:b8a7fa02-2d66-48bb-99b3-f20b7cde5127/mop_2016_q3_in_focus_03_Handler.pdf File-Format: application/pdf File-Size: 409 kb Handle: RePEc:onb:oenbmp:y:2016:i:3:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Walpurga Köhler-Töglhofer Author-Name-First: Walpurga Author-Name-Last: Köhler-Töglhofer Author-Email: walpurga.koehler-toeglhofer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Doris Prammer Author-Name-First: Doris Author-Name-Last: Prammer Author-Email: doris.prammer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Lukas Reiss Author-Name-First: Lukas Author-Name-Last: Reiss Author-Email: lukas.reiss@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: The financial relations between the Nationalbank and the government Abstract: The privilegirte oesterreichische National-Bank was founded in 1816, but the central government has held a major share in the Austrian central bank only since 1955. However, the government has always participated significantly in the Nationalbank’s profits via various channels. In this paper we analyze the financial relations between the Nationalbank and the Austrian (or Austro-Hungarian) government over the last 200 years. While today, the Austrian government’s share in the effective profit distribution of the Oesterreichische Nationalbank(OeNB) is 100% (and thus much above 19th-century levels), the OeNB’s holdings of Austrian government debt were relatively small from the mid-1950s until recently. The Eurosystem’s Public Sector Purchase Programme is currently leading to a significant increase in holdings of Austrian government debt recorded at OeNB’s balance sheet. It will likely go somewhat above the levels observed from the 1830s to the 1890s, when average inflation was around ½%. Classification-JEL: N13, N14, N43, N44 Keywords: economic history, public debt, inflation, central banks Pages: 77-93 Year: 2016 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:0b034881-240b-45ed-952d-1e47014cf489/mop_2016_q3_in_focus_04_Prammer_Reiss_Koehler-Toeglhofer.pdf File-Format: application/pdf File-Size: 575 kb Handle: RePEc:onb:oenbmp:y:2016:i:3:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Clemens Jobst Author-Name-First: Clemens Author-Name-Last: Jobst Author-Email: clemens.jobst@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Helmut Stix Author-Name-First: Helmut Author-Name-Last: Stix Author-Email: helmut.stix@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43(1)404-20-7211 Author-Workplace-Fax: +43(1)404-20-7299 Title: Florin, crown, schilling and euro: an overview of 200 years of cash in Austria Abstract: This article provides an overview of the supply and demand for cash in Austria over the past 200 years. After looking at the government, mint and central bank as cash providers and tracing the composition of cash supply, the article presents several stylized facts about the long-run evolution of cash demand. Results show a relatively stable currency-to-GDP ratio, which is remarkable, given the structural changes in the economy and advances in payment Technologies over the past 200 years. Among possible explanations is that innovations have significantly increased the use of close cash substitutes like deposits without, however, reducing the currency-to-GDP ratio. Second, factors like the increasing monetization of the economy during the 19th century might have compensated for the cash-saving impact of financial innovations. Moreover, most of the demand for cash might not be susceptible to payment innovations as it is driven by hoarding. Finally, large political disruptions i.e. times of elevated economic uncertainty, and systemic banking crises exert strong and persistent effects on the use of cash. Classification-JEL: E51, E42, N13, N14 Keywords: currency, cash, long-run development, payment systems, Austria-Hungary, Austria Pages: 94-119 Year: 2016 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:b2641088-df0b-484a-91c1-6ede7d37b53e/mop_2016_q3_in_focus_05_Jobst_Stix.pdf File-Format: application/pdf File-Size: 645 kb Handle: RePEc:onb:oenbmp:y:2016:i:3:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Hans Kernbauer Author-Name-First: Hans Author-Name-Last: Kernbauer Title: Cashless payments in Austria: the role of the central bank Classification-JEL: E42, E50, E58 Keywords: economic and banking history of Austria, development of bank-based payment systems, role of the Austrian central bank Pages: 120-139 Year: 2016 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:c84d4c27-6ace-4e8c-b1ef-d5cac58b69d3/mop_2016_q3_in_focus_06_Kernbauer.pdf File-Format: application/pdf File-Size: 423 kb Handle: RePEc:onb:oenbmp:y:2016:i:3:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Clemens Jobst Author-Name-First: Clemens Author-Name-Last: Jobst Author-Email: clemens.jobst@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Kilian Rieder Author-Name-First: Kilian Author-Name-Last: Rieder Title: Principles, circumstances and constraints: the Nationalbank as lender of last resort from 1816 to 1931 Classification-JEL: E58, G01, N13, N14 Keywords: central bank, Austria, Oesterreichische Nationalbank, lender of last resort, financial crisis, banking crisis, credit rationing, liquidity crisis, bank run, moral hazard, Bagehot Pages: 140-162 Year: 2016 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:ce383d85-91a4-4b23-b176-d47eaf91f3a7/mop_2016_q3_in_focus_07_Jobst_Rieder.pdf File-Format: application/pdf File-Size: 448 kb Handle: RePEc:onb:oenbmp:y:2016:i:3:b:7 Template-Type: ReDIF-Article 1.0 Author-Name: Sophia Döme Author-Name-First: Sophia Author-Name-Last: Döme Author-Name: Stefan W. Schmitz Author-Name-First: Stefan W. Author-Name-Last: Schmitz Author-Email: stefan.schmitz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Katharina Steiner Author-Name-First: Katharina Author-Name-Last: Steiner Author-Email: katharina.steiner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Foreign Research Division Author-Name: Eva Ubl Author-Name-First: Eva Author-Name-Last: Ubl Author-Email: Eva.Ubl@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Financial Markets Analysis and Surveillance Division Title: The changing role of macroprudential policy in Austria after World War II Abstract: The need for and implementation of macroprudential supervision was a key lesson from the global financial crisis of 2008. However, historical protocols, legislation, policy agreements as well as the literature bear witness of a longer history of macroprudential policy in Austria: it predates the crisis by about 60 years during which it gradually evolved. We argue that careful analysis of this history provides interesting insights for current policymakers. We identify the following key lessons from analyzing the changing legal nature, motivation and effectiveness of macroprudential policy in Austria: first, macroprudential policy requires a sound legal basis; second, measures have to be quite intrusive to effectively curtail the build-up of systemic risk. Less intrusive measures become effective above all by increasing the shock-absorbing capacity of the financial system, once systemic risks materialize. Classification-JEL: E50, E60, G20, N24 Keywords: history of Austrian macroprudential policy, credit control agreements, minimum liquidity requirements, Limes, Kreditplafond, capital buffers Pages: 163-189 Year: 2016 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:05d7fa7a-8dfd-42d2-a7cf-41cf38e43dec/mop_2016_q3_in_focus_08_Doeme_Schmitz_Steiner_Ubl.pdf File-Format: application/pdf File-Size: 410 kb Handle: RePEc:onb:oenbmp:y:2016:i:3:b:8 Template-Type: ReDIF-Article 1.0 Author-Name: Stefan W. Schmitz Author-Name-First: Stefan W. Author-Name-Last: Schmitz Author-Email: stefan.schmitz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: The OeNB’s reaction to the end of the Bretton Woods system: tracing the roots of the Indicator Abstract: In response to the end of the Bretton Woods system, the Oesterreichische Nationalbank(OeNB) aimed at keeping the value of the Austrian schilling stable vis-à-vis the currencies of the country’s main trading partners. The OeNB’s solution for achieving this objective was to introduce an internal target for the exchange rate between the Austrian schilling and the U.S.dollar (USD) based on a method called the Indicator. This paper investigates the origins of this Indicator. It finds that it was an ad hoc innovation developed by the OeNB during the days before August 25, 1971, in response to political opposition to its initial plans to revalue the Austrian schilling in line with the Deutsche mark and the Swiss franc only. The Indicator enabled the central bank to channel the political opposition into a technical debate and to make some concessions on details such as the composition of the currency basket. At the same time, it helped manufacture consent regarding the cornerstones of the new strategy, namely the stability of exchange rates vis-à-vis the main trading partners and a managed float vis-à-vis the U.S. dollar. The OeNB thereby preserved the traditional consensus in Austrian Exchange rate policy, despite the fundamental shift from the traditional export-oriented to a stability-oriented exchange rate policy which took place in the early 1970s. Classification-JEL: E40, N10 Keywords: Austrian economic history, monetary and exchange rate policy, Bretton Woods, currency baskets Pages: 190-210 Year: 2016 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:590c0b62-fd8d-4502-8bac-fd3e82c999f1/mop_2016_q3_in_focus_09_Schmitz.pdf File-Format: application/pdf File-Size: 275 kb Handle: RePEc:onb:oenbmp:y:2016:i:3:b:9 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Klaus Vondra Author-Name-First: Klaus Author-Name-Last: Vondra Author-Email: klaus.vondra@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Analyses - Economic recovery in 2016 after four years of weak growth – Economic outlook for Austria from 2016 to 2018 (June 2016) Pages: 6-31 Year: 2016 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:99408954-e4d4-4c3c-99da-8659c30f4a25/mop_2016_q2_analyses.pdf File-Format: application/pdf File-Size: 611 kb Handle: RePEc:onb:oenbmp:y:2016:i:2:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Pirmin Fessler Author-Name-First: Pirmin Author-Name-Last: Fessler Author-Email: Pirmin.Fessler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Peter Lindner Author-Name-First: Peter Author-Name-Last: Lindner Author-Email: peter.lindner@oenb.at Author-Workplace-Name: Economic Analysis Division Author-Name: Martin Schürz Author-Name-First: Martin Author-Name-Last: Schürz Author-Email: martin.schuerz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: In focus: Eurosystem Household Finance and Consumption Survey 2014 – first results for Austria (second wave) Abstract: This report presents results from the second wave of the Eurosystem Household Finance and Consumption Survey (HFCS) for Austria. The focus of the report is on the wealth components of household balance sheets, the risk-bearing capacity of indebted households and changes in the main wealth components between the 2010 and 2014 waves. The composition of household balance sheets and the distribution of net wealth are found to have been stable over time. The risk-bearing capacity of households is high. Classification-JEL: D1, D3 Keywords: private wealth, distribution, household, survey, HFCS Pages: 34-95 Year: 2016 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:7a74106f-1d6e-48fd-ab25-cb765f678f6a/mop_2016_q2_in_focus.pdf File-Format: application/pdf File-Size: 1488 kb Handle: RePEc:onb:oenbmp:y:2016:i:2:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Fabio Rumler Author-Name-First: Fabio Author-Name-Last: Rumler Author-Email: fabio.rumler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Title: Austrian economy fueled by growth stimuli, yet fraught with external risks Pages: 6–13 Year: 2016 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:2d1009e1-4064-44e8-a3aa-1b5793c3a459/mop_2016_q1_analyses01.pdf File-Format: application/pdf File-Size: 1619 kb Handle: RePEc:onb:oenbmp:y:2016:i:1:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Beer Author-Name-First: Christian Author-Name-Last: Beer Author-Email: christian.beer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Ernest Gnan Author-Name-First: Ernest Author-Name-Last: Gnan Author-Email: ernest.gnan@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7400 Author-Name: Doris Ritzberger-Grünwald Author-Name-First: Doris Author-Name-Last: Ritzberger-Grünwald Author-Email: doris.ritzberger-gruenwald@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-5201 Author-Workplace-Fax: +43-1-40420-5299 Title: Saving, portfolio and loan decisions of households when interest rates are very low – survey evidence for Austrian households Abstract: Do Austrian households adapt their savings and loan decisions in an ultra-low interest rate environment? To answer this question, we analyzed a special OeNB barometer survey conducted in spring 2015 that allows us to assess household interest rate perceptions as well as their impact on saving, portfolio allocation and borrowing decisions.
Overall, we find that the very low interest rates were only one of several determinants in savings and loan decisions and have had only a small effect so far. The impact of the ultra-low interest rate environment on portfolio choice is also quite limited. Households that did adapt their portfolio often showed a stronger preference for savings with savings and loan associations than for other options. Furthermore, we observe a shift to real assets. Portfolio rebalancing into riskier assets is not widespread.
Many households at the time of the survey considered circumstances relatively favorable for taking out loans. However, this does not imply that loan demand increased strongly, as borrowing decisions are also affected by other, potentially more important determinants. If they were faced with higher loan installments, most households would cut consumption expenditures.
The survey results may be useful in assessing e.g. the effectiveness of monetary policy. The modest impact of ultra-low interest rates on savings and portfolio rebalancing into riskier assets suggests that ultra-low interest rates have a limited ability to stimulate aggregate demand through the risk-taking and portfolio rebalancing channels, at least in the case of households in Austria. Classification-JEL: D12, D14 Keywords: household finance, low interest rates, savings and loan decisions Pages: 14–32 Year: 2016 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:d04aaa38-0bac-4c51-ad69-75396dabd10d/mop_2016_q1_analyses02.pdf File-Format: application/pdf File-Size: 1675 kb Handle: RePEc:onb:oenbmp:y:2016:i:1:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Doris Prammer Author-Name-First: Doris Author-Name-Last: Prammer Author-Email: doris.prammer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Lukas Reiss Author-Name-First: Lukas Author-Name-Last: Reiss Author-Email: lukas.reiss@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: The Stability and Growth Pact since 2011: More complex – but also stricter and less procyclical? Abstract: The European fiscal framework has been extensively reformed since 2011. Nevertheless, it is consistently criticized for its procyclicality, its complexity and its large consolidation requirements. We provide a general overview of European fiscal rules. Then we argue that while recent reforms have undoubtedly made the Stability and Growth Pact more complex, one cannot make such a general statement concerning its procyclicality and its strictness. The preventive arm of the SGP has been made both stricter and less procyclical, while the newly introduced debt benchmark is not only very complex, but also more procyclical than the rest of the SGP. Furthermore, the effect on the procyclicality of Excessive Deficit Procedures is ambivalent; procyclicality was increased by the introduction of intermediate headline targets, but also decreased via new effective action indicators. Classification-JEL: E61, E62, H60 Keywords: Stability and Growth Pact, fiscal rules, fiscal policy Pages: 33–53 Year: 2016 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:6bff50af-6c2f-4045-a37f-f5fc2986ea8d/mop_2016_q1_analyses03.pdf File-Format: application/pdf File-Size: 1725 kb Handle: RePEc:onb:oenbmp:y:2016:i:1:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Austria: Sluggish economic growth Pages: 6-11 Year: 2015 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:56372ff4-a9cb-4c83-9d9f-45add268dc97/mop_2015_q3_analyses_01.pdf File-Format: application/pdf File-Size: 459 kb Handle: RePEc:onb:oenbmp:y:2015:i:3:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Author-Name: Klaus Vondra Author-Name-First: Klaus Author-Name-Last: Vondra Author-Email: klaus.vondra@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Walter Waschiczek Author-Name-First: Walter Author-Name-Last: Waschiczek Author-Email: walter.waschiczek@oenb.at. Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Causes of declining investment activity in Austria Abstract: Austria’s share of investment relative to GDP, which is high by international standards, dipped
significantly in recent years. This downtrend, which was also evident in peer economies, chiefly
reflected an adjustment process in a climate of weaker long-term growth. While the international
trend reversed in mid-2013, Austria’s investment share continued to decline. The
main reasons for Austrian companies’ current reluctance to invest can be traced back to
fragile
demand and deep uncertainty. Lack of access to finance is unlikely to have dampened
investment activity, as the higher level of internal financing has offset the diminishing importance
of bank loans. Although there is some evidence of banks tightening their lending
conditions,
this is unlikely to have led to credit rationing, as demand for bank loans has also
fallen off. Estimations based on a structural vector autoregressive (VAR) model also show that
loan supply shocks have only had a small negative impact on growth. Classification-JEL: E22, E32, E51 Keywords: Austria, investment, business cycle, loan supply, credit crunch Pages: 12-34 Year: 2015 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:b9575b30-aa12-4846-b595-4d6c34c22717/mop_2015_q3_analyses_02.pdf File-Format: application/pdf File-Size: 1074 kb Handle: RePEc:onb:oenbmp:y:2015:i:3:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Markus Knell Author-Name-First: Markus Author-Name-Last: Knell Author-Email: markus.knell@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7218 Author-Workplace-Fax: +43-1-40420-7299 Author-Name: Esther Segalla Author-Name-First: Esther Author-Name-Last: Segalla Author-Email: esther.segalla@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Name: Andrea Weber Author-Name-First: Andrea Author-Name-Last: Weber Author-Email: a.weber@uni-mannheim.de Author-Workplace-Name: University of Mannheim Title: Expected retirement age and pension benefits in Austria: evidence from survey data Abstract: In this paper we present evidence on Austrians’ expectations about their retirement age and
the size of their pension benefits. We find that young people expect to retire at an
older age compared to the actual age. The answers indicate that this increase in the expected
retirement age might be sufficient to counterbalance the forecasted rise in life expectancy
over the next decades. Furthermore,
the increase is also approximately in line with the
assumptions
that underlie official forecasts about the development of pension expenditures.
People in Austria also expect
to receive less pension benefits, i.e. they expect net replacement
rates to decrease, although in this case our results are less conclusive. In general, there exists
a considerable degree of uncertainty,
in particular among younger people. Furthermore, we
find that the main structure of the new pension account system does not seem to be well
understood.
This suggests that the rules of the new system could be better communicated (e.g.
via individualized pension account information). Classification-JEL: J1, J26, H55, D84 Keywords: pension system, retirement age, replacement rate, subjective expectations Pages: 35-57 Year: 2015 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:7eb2cbb7-dba2-4ada-a124-2cb3ac7116c4/mop_2015_q3_analyses_03.pdf File-Format: application/pdf File-Size: 562 kb Handle: RePEc:onb:oenbmp:y:2015:i:3:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Klaus Vondra Author-Name-First: Klaus Author-Name-Last: Vondra Author-Email: klaus.vondra@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Four-year economic downturn to end in 2016 – Economic outlook for Austria from 2015 to 2017 (June 2015) Pages: 6–34 Year: 2015 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:8f5145e7-6b0f-487c-9103-0cccfef475f6/mop_2015_q2_analyses01.pdf File-Format: application/pdf File-Size: 754 kb Handle: RePEc:onb:oenbmp:y:2015:i:2:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Bettina Greimel-Fuhrmann Author-Name-First: Bettina Author-Name-Last: Greimel-Fuhrmann Author-Email: bettina.fuhrmann@wu.ac.at Author-Workplace-Name: Vienna University of Economics and Business Author-Name: Maria Antoinette Silgoner Author-Name-First: Maria Antoinette Author-Name-Last: Silgoner Author-Email: Maria.Silgoner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Rosa Weber Author-Name-First: Rosa Author-Name-Last: Weber Author-Email: rosa.weber.09@gmail.com Author-Workplace-Name: Vienna University of Economics and Business Title: Financial literacy gaps of the Austrian population Abstract: Most people lack financial knowledge and have trouble dealing competently with their financial affairs, as evidenced by recent empirical research on financial literacy in various countries. We investigate financial literacy among Austrians based on a novel dataset covering about 2,000 persons. Our findings corroborate the existence of substantial knowledge gaps, which are most conspicuous among respondents with low educational attainment and low incomes, among younger and older people as well as women. We provide tentative evidence for a positive link between financial knowledge scores and financial behavior, such as setting aside rainy day funds or using several sources of information when choosing financial products. Classification-JEL: A20, D14 Keywords: financial literacy, financial education, central banks Pages: 35–51 Year: 2015 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:cff882a2-ea47-4d90-bc1e-fac843be7864/mop_2015_q2_analyses02.pdf File-Format: application/pdf File-Size: 559 kb Handle: RePEc:onb:oenbmp:y:2015:i:2:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Ernest Gnan Author-Name-First: Ernest Author-Name-Last: Gnan Author-Email: ernest.gnan@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7400 Title: Implications of ultra-low interest rates for financial institutions’ asset liability management – a policy-oriented overview Abstract: In a historical perspective, interest rates are currently very low. The further course of nominal and real interest rates crucially depends on how the macroeconomy will develop over the cycle and in a long-term structural perspective. In this contribution, we analyze how ultra-low interest rates affect financial institutions and their asset-liability management. In the short term, the impact depends on the relative duration of assets and liabilities. Hence, different financial institutions are affected differently depending on their balance sheet structures. Yet in the long term, the income of all types of financial institutions tends to suffer from ultra-low interest rates. A protracted period of (ultra-)low interest rates might compromise financial stability by eroding financial intermediaries’ capital; by amplifying the risk of bubbles and bursts; by heightening bond market volatility and its potential to trigger runs and fire sales in illiquid markets; and by causing risk positions to grow in the search for yield. Consequently, risks from a protracted period of ultra-low interest rates have been gaining attention from financial
regulators and supervisors. Adequate action requires an integrated view of monetary policy, macroprudential and microprudential regulation and supervision of various types of financial intermediaries including banks, institutional investors and shadow banks. Classification-JEL: E43, G2, G38 Keywords: ultra-low interest rates, asset-liability management, financial institutions Pages: 52–76 Year: 2015 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:1ddbf409-4b76-4eff-bbcb-7621069fc5db/mop_2015_q2_analyses03.pdf File-Format: application/pdf File-Size: 912 kb Handle: RePEc:onb:oenbmp:y:2015:i:2:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Fabio Rumler Author-Name-First: Fabio Author-Name-Last: Rumler Author-Email: fabio.rumler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Austria: Economic Growth in 2014 at 0.4% Pages: 6-10 Year: 2015 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:8626dc84-d9a3-48b1-ba26-ea0d98d9bd60/mop_2015_q1_analyses1.pdf File-Format: application/pdf File-Size: 403 kb Handle: RePEc:onb:oenbmp:y:2015:i:1:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Friedrich Fritzer Author-Name-First: Friedrich Author-Name-Last: Fritzer Author-Email: friedrich.fritzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7417 Author-Name: Fabio Rumler Author-Name-First: Fabio Author-Name-Last: Rumler Author-Email: fabio.rumler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Title: Determinants of Inflation Perceptions and Expectations: an Empirical Analysis for Austria Abstract: This study uses micro data from a survey among 2,000 Austrian households conducted in
2013 to investigate the socioeconomic determinants of inflation perceptions and expectations.
In our econometric analysis, we find that socioeconomically disadvantaged respondents (less
income, lower educational attainment) and older interviewees tend to have higher inflation
perceptions. In contrast, respondents living in larger households or in agglomerations with
more than 5,000 inhabitants have lower inflation perceptions. As to inflation expectations, we
find that older and less educated people tend to report higher inflation expectations. Additionally,
we document that women tend to have higher inflation expectations than men and that
knowledge of the Eurosystem’s definition of price stability dampens inflation expectations.
Moreover, respondents who are skeptical about the reliability of the official inflation indicators
state higher inflation expectations. As largely correct and realistic inflation perceptions and
expectations are important for the credibility of monetary policy, these results suggest that
financial education strategies should be focused on population groups with lower educational
attainment, less income and on younger people. Classification-JEL: C25, E31, J10 Keywords: inflation perceptions, inflation expectations, socioeconomic characteristics, survey data Pages: 11-26 Year: 2015 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:98c44677-6106-4160-bd38-0b9370e4474e/mop_2015_q1_analyses2.pdf File-Format: application/pdf File-Size: 269 kb Handle: RePEc:onb:oenbmp:y:2015:i:1:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Doris Prammer Author-Name-First: Doris Author-Name-Last: Prammer Author-Email: doris.prammer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Lukas Reiss Author-Name-First: Lukas Author-Name-Last: Reiss Author-Email: lukas.reiss@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Impact of Inflation on Fiscal Aggregates in Austria Abstract: In Austria, temporary shocks to inflation (with unchanged real macroeconomic developments)
impact the primary balance, i.e. the overall budget balance excluding interest payments,
mainly via taxes and transfers whose brackets or rates are not indexed to inflation. Even
though the overall effect of such shocks on budget balances would be very small in Austria,
below-average inflation, for example, is still negative from a government’s viewpoint because
it significantly raises the public debt ratio. Lower inflation moreover depresses the gains made
from both bracket creep and the devaluation of nominally fixed transfers, which is, however,
somewhat compensated for by decreasing interest payments. Households, by contrast, benefit
from lower inflation as it causes their net tax burden to go down. Classification-JEL: E62, H60 Keywords: bracket creep, inflation indexation, Austria, social benefits Pages: 27-41 Year: 2015 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:9744bd80-5752-4c05-bd97-8229511210fb/mop_2015_q1_analyses3.pdf File-Format: application/pdf File-Size: 631 kb Handle: RePEc:onb:oenbmp:y:2015:i:1:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Housing Markets in Austria, Germany and Switzerland Abstract: Running counter to the sharp rise in house prices and housing wealth observed since the mid- 1990s in the vast majority of European countries, real house prices in Germany and Austria were going down in this period and did not start to rise until 2010 or 2007, respectively. This reflects national idiosyncracies in housing markets and motivated the discussion of relevant peculiarities in, and similarities among, Austria and Germany as well as Switzerland. Among the most important structural features that ensured housing market stability in these three countries during the last decade are well-developed rental markets, low homeownership ratios and conservative lending standards. While the tax systems of Germany and Austria do not encourage indebtedness, Swiss taxpayers benefit from taking on a lot of leverage. Recent house price increases in all three countries under review here can be attributed to various crises-related channels (extremely low interest rates, economic uncertainty, safe-haven effect) as well as to demographic developments, including immigration. The Swiss authorities have already implemented a number of macroprudential measures to safeguard the banking sector. Classification-JEL: R31, E32, E44 Keywords: house prices, rental markets, housing finance, taxation Pages: 42-58 Year: 2015 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:5c14703f-adfd-42d9-b1a7-434921e43cb9/mop_2015_q1_analyses4.pdf File-Format: application/pdf File-Size: 488 kb Handle: RePEc:onb:oenbmp:y:2015:i:1:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Growth Remains Weak in 2015 – Economic Outlook for Austria from 2014 to 2016 (December 2014) Pages: 6-34 Year: 2014 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:c03ac382-c44b-467d-b382-12e44ec94919/mop_2014_q4_analyses_1.pdf File-Format: application/pdf File-Size: 431 kb Handle: RePEc:onb:oenbmp:y:2014:i:4:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Walpurga Köhler-Töglhofer Author-Name-First: Walpurga Author-Name-Last: Köhler-Töglhofer Author-Email: walpurga.koehler-toeglhofer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Alfred Stiglbauer Author-Name-First: Alfred Author-Name-Last: Stiglbauer Author-Email: alfred.stiglbauer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7435 Title: A Common European Unemployment Insurance – A Much Debated Route toward European Fiscal Union Abstract: The crisis has reignited a debate on deeper fiscal integration in the euro area. The goal is to improve the capability of the currency union to cope with asymmetric shocks. One instrument in this context is the implementation of a European unemployment insurance (EUI) scheme aiming at automatic stabilization of income and aggregate output in countries affected by adverse macroeconomic shocks and rising unemployment. Recently, a number of proposals
and estimates of the economic effects of such a scheme have been published. The empirical analyses indicate a non-negligible stabilization effect of an EUI. However, an EUI is likely to face several problems originating, among other things, from structural differences in labor markets and potential moral hazard by Member States. An EUI therefore does not appear to be the most appropriate approach to increasing common risk sharing. Classification-JEL: E63, F45, H55, J65 Keywords: Automatic stabilization, unemployment insurance, monetary union, fiscal union Pages: 35-52 Year: 2014 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:f71716c9-0b12-4a2a-9638-692a7bb099a2/mop_2014_q4_analyses_2.pdf File-Format: application/pdf File-Size: 294 kb Handle: RePEc:onb:oenbmp:y:2014:i:4:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Beat Weber Author-Name-First: Beat Author-Name-Last: Weber Author-Email: beat.weber@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Bitcoin – The Promise and Limits of Private Innovation in Monetary and Payment Systems Abstract: A private initiative that has created a virtual currency and a payment system based on cryptography and decentralized management, Bitcoin is considered not only an interesting,
but also a disruptive technical innovation by many observers. A number of regulatory and supervisory bodies have issued assessments of the phenomenon, contributing to an emerging
international discussion. Does Bitcoin’s claim to provide useful monetary and payment services hold up when checked against principles of monetary theory and the economics of payment
systems? We find that while Bitcoin does not rival the established money and payment systems in their traditional domains, a complementary function is conceivable in niches. Using the
Bitcoin network poses several risks to customers, however. Since this network and financial services related to bitcoins are not regulated, costumers must take appropriate technical
measures to protect their bitcoin holdings. In case of error and fraud, payments are difficult to reverse. Furthermore, the significant exchange rate fluctuations could pose a grave risk to
bitcoin owners’ wealth and discourage widespread use for monetary purposes. In a nutshell, at present, bitcoins can be regarded as speculative assets, and the Bitcoin network might inspire
further innovation in payment systems and other applications. Classification-JEL: E42, E52, E58 Pages: 53-66 Year: 2014 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:69d918db-d468-46f9-b358-3b5dd84677f6/mop_2014_q4_analyses_3.pdf File-Format: application/pdf File-Size: 226 kb Handle: RePEc:onb:oenbmp:y:2014:i:4:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Title: Austrian GDP Growth at 0.8% in 2014 Pages: 6-12 Year: 2014 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:e867b448-a375-460a-a00f-d3f902979c67/mop_2014_q3_analyses_1.pdf File-Format: application/pdf File-Size: 410 kb Handle: RePEc:onb:oenbmp:y:2014:i:3:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Labor Productivity Developments in Austria in an International Perspective Abstract: After World War II, Austria, like other European countries, had for decades been improving its labor productivity, continuously catching up relative to the United States. Only then U.S. labor productivity grew at an accelerated pace from the mid-1990s to the mid-2000s on the back of new technologies implemented in distribution as well as finance and business services, did Austria – and in particular its service sector – fall behind. Unlike the U.S.A., Austria did not benefit from a technology-driven boom. By contrast, the productivity performance of Austrian manufacturing, without the production of information and communications technologies, is comparable to that in the U.S.A. and in Germany. Hence, to boost labor productivity in Austria, a high priority should be given to policies stimulating the diffusion of new technologies in the service sector. Classification-JEL: O30, O47, O57 Keywords: Labor productivity, growth accounting, services, information and communications technologies Pages: 13-35 Year: 2014 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:0787f0d8-4840-4aff-b4e5-09b380301cdc/mop_2014_q3_analyses_2.pdf File-Format: application/pdf File-Size: 1590 kb Handle: RePEc:onb:oenbmp:y:2014:i:3:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Klaus Forstner Author-Name-First: Klaus Author-Name-Last: Forstner Author-Email: Klaus_Forstner@gmx.at Author-Workplace-Name: student at the Vienna University of Economics and Business Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: How Gender-Specific Are Payments? A Study Based on Austrian Survey Data from 1996 to 2011 Abstract: Based on payments surveys commissioned by the OeNB in 1996, 2000, 2005 and 2011, this study highlights patterns in consumer payment behavior in Austria with a view to establishing
gender-specific patterns and changes thereof. While cash continues to dominate, we find that its use contracted to a share of roughly two-thirds in value terms in the review period. This decline was almost twice as large for women as for men (–24 percentage points versus –12 percentage points), thus more than offsetting the significantly higher cash payment volume of women observed in 1996 (90% versus 81%). By 2011, women were heavier users of debit cards than men, in terms of transactions as well as in terms of value.
The higher tendency of women to use cashless payment systems evidently reflects safety concerns with cash. Women are also more risk averse than men in the sense that they are
more likely to plan their monthly expenses and more likely to acknowledge the relevance of keeping an eye on what they spend. Classification-JEL: E58, E41, D12, J16 Pages: 36-53 Year: 2014 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:613877d2-4218-46b5-8dc8-f5aafdc54ac7/mop_2014_q3_analyses_3.pdf File-Format: application/pdf File-Size: 452 kb Handle: RePEc:onb:oenbmp:y:2014:i:3:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Klaus Vondra Author-Name-First: Klaus Author-Name-Last: Vondra Author-Email: klaus.vondra@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Austria Holds Intra-EU Export Market Shares almost Constant despite Difficult Economic Environment Abstract: Before the global recession, export growth outperformed economic growth across the EU. The economic crisis hit almost all EU countries through a steep fall in exports, especially exports of goods. Yet, as shown in this article, almost all countries in Europe were hit by the slump in exports simultaneously; hence, intra-EU export market shares were left broadly unchanged by the crisis. This article presents a market share analysis for both goods and services and explores some underlying factors for these developments. From a regional perspective, Central, Eastern and Southeastern European (CESEE) countries gained market shares in the period 2004 to 2012 at the expense of major pre-2004 EU countries (the U.K., France and Italy).
From a product perspective, service market shares developed broadly in line with goods market shares. At the same time, service-oriented countries were able to compensate losses in goods market shares by expanding service market shares. Austria managed to keep its market share position almost constant, benefiting most from trade links with Germany. At the product level, Austria strengthened its exports of high-technology good products. Classification-JEL: F14, F15, F40 Pages: 54-74 Year: 2014 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:cdf18c38-5a30-4358-9afa-2af23b18a370/mop_2014_q3_analyses_4.pdf File-Format: application/pdf File-Size: 824 kb Handle: RePEc:onb:oenbmp:y:2014:i:3:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Klaus Vondra Author-Name-First: Klaus Author-Name-Last: Vondra Author-Email: klaus.vondra@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Moderate Upswing amid High Uncertainty – Economic Outlook for Austria from 2014 to 2016 (June 2014) Pages: 6-30 Year: 2014 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:537039a3-3da7-4c60-8a13-c96695e73379/mop_2014_q2_analyse1.pdf File-Format: application/pdf File-Size: 1448 kb Handle: RePEc:onb:oenbmp:y:2014:i:2:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Doris Prammer Author-Name-First: Doris Author-Name-Last: Prammer Author-Email: doris.prammer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Lukas Reiss Author-Name-First: Lukas Author-Name-Last: Reiss Author-Email: lukas.reiss@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Fiscal Projections by the Oesterreichische Nationalbank: Methods and Motives Abstract: The financial and economic crisis and recent reforms in economic governance have increased the importance of fiscal projections both inside and outside central banks. The OeNB fiscal projection model is driven by external demand, by considerations of the comparability of subcomponents with cash data (or other administrative information), and by the difference between the driving factors of expenditure and revenue categories. The accuracy of ESCB central banks’ fiscal projections is limited by prudency requirements as well as the no-policy change assumption (in the medium run) and by one-off events and a lack of information on smaller entities (in the short run). Classification-JEL: E62 Keywords: Fiscal projections, tax elasticities, projection errors Pages: 31-48 Year: 2014 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:1a3feded-2fb2-4081-9058-7d48153a4d3b/mop_2014_q2_analyse2.pdf File-Format: application/pdf File-Size: 2400 kb Handle: RePEc:onb:oenbmp:y:2014:i:2:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Intergenerational Transmission: How Strong Is the Effect of Parental Homeownership? Results of a Survey on Households in Austria Abstract: Against the background of decreasing housing subsidies and rising housing prices, this paper contributes to the analysis of various influences that determine whether a household is a housing owner or tenant (tenure status). The study applies a logistic regression to data for Austria from the Household Finance and Consumption Survey (HFCS). In particular, the study investigates the extent to which parental homeownership influences the tenure choice of young adults. The results show that the probability of becoming a homeowner increases significantly, by 31 percentage points, for a household with homeowning parents. Gifts and inheritances appear to be important mechanisms underlying the intergenerational transmission
of homeownership in Austria. Furthermore, households become homeowners earlier in their life cycle if their parents are or were homeowners. The strong effect of parental ownership on the ability to afford ownership and the distinct importance of inheritances and gifts are among the factors responsible for housing wealth disparity. Classification-JEL: D91, R31, R21, J12, D12 Pages: 49-64 Year: 2014 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:2e712520-779b-48b4-881b-0b84244fc92b/mop_2014_q2_analyse3.pdf File-Format: application/pdf File-Size: 2411 kb Handle: RePEc:onb:oenbmp:y:2014:i:2:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Helmut Elsinger Author-Name-First: Helmut Author-Name-Last: Elsinger Author-Email: helmut.elsinger@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://finance2.bwl.univie.ac.at/members/elsinger/elsinger.htm Author-Workplace-Phone: +43-1-4277 38057 Author-Workplace-Fax: +43-1-4277 38054 Author-Name: Walter Waschiczek Author-Name-First: Walter Author-Name-Last: Waschiczek Author-Email: walter.waschiczek@oenb.at. Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Toward a European Banking Union: Taking Stock Summary of the 42nd OeNB Economics Conference in Vienna on May 12 and 13, 2014 Pages: 65-72 Year: 2014 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:a9e434ef-04a0-4d30-a8b8-12f0f2dbe91f/mop_2014_q2_analyse4.pdf File-Format: application/pdf File-Size: 2198 kb Handle: RePEc:onb:oenbmp:y:2014:i:2:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Austria: Economic Activity Picks Up at the Turn of the Year Pages: 6-11 Year: 2014 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:f18b24cd-45b9-40d7-9f7b-1323e78891ef/mop_2014_q1_analyses1.pdf File-Format: application/pdf File-Size: 2079 kb Handle: RePEc:onb:oenbmp:y:2014:i:1:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Christiane Kment Author-Name-First: Christiane Author-Name-Last: Kment Author-Email: christiane.kment@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, European Affairs and International Financial Organizations Division Author-Name: Isabella Lindner Author-Name-First: Isabella Author-Name-Last: Lindner Author-Email: isabella.lindner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, European Affairs and International Financial Organizations Division Title: The EU’s Reformed Institutional Framework and the Way Forward Abstract: This article focuses on measures taken in 2012 and 2013 to reform the EU’s institutional
framework. These measures, which were largely based on provisions included in the Treaty of
Lisbon, have increased the role of the European Parliament and of the national parliaments.
Stronger parliamentary involvement and interinstitutional agreements on democratic accountability
seem to counter the theory of a lack of democratic legitimacy; legitimacy would appear
to be jeopardized more severely by an emerging “social deficit.” At the same time, governance
has become more complex, as the Community method of decision making was mixed with
intergovernmental decision making in crisis management and prevention measures, and as
variable membership patterns have evolved. By establishing the European Stability Mechanism
(ESM) for euro area countries and a facility for providing balance of payments assistance
to non-euro area countries, the EU has set up permanent financial crisis management
mechanisms. Fiscal governance reforms replicate the precrisis structure, and – as before –
success depends on the commitment of Member States to implement reform measures. With
more detailed reporting requirements and more ambitious timelines in the European Semester,
economic governance has become more extensive. Yet European and Monetary Union (EMU)
remains incomplete: By establishing a banking union, the EU Member States have transferred
national sovereignty to the supranational level, but the reforms stop short of a fiscal union, for
which the Treaty of Lisbon would need to be changed. Classification-JEL: F15, F55, K0, N24, N44, O52 Keywords: EU economic governance reform, EMU, sixpack, twopack, fiscal compact, TSCG, banking union, SSM, SRM, SRF, European Stability Mechanism (ESM), outright monetary transactions (OMT), intergovernmental agreements Pages: 12-32 Year: 2014 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:67210c4f-c492-428d-b4ac-b778bfbeb640/mop_2014_q1_analyses2.pdf File-Format: application/pdf File-Size: 2180 kb Handle: RePEc:onb:oenbmp:y:2014:i:1:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Are Recent Increases of Residential Property Prices in Vienna and Austria Justified by Fundamentals? Abstract: Residential property prices in Vienna have risen sharply since 2005 and to a lesser degree
throughout Austria as well. This paper assesses whether the upward movement is justified by
fundamental factors or whether it is exaggerated, using a fundamental residential property
price indicator for Vienna and Austria to identify deviations between actual and fundamental
real estate prices.
The indicator consists of seven subindicators that address a variety of perspectives, including
those related to households, investors and systemic factors. For Vienna, the indicator points to
an increasing degree of overvaluation in property prices (by 20% in the second quarter of
2013). The primary driver behind this trend, which has recently experienced an especially pronounced
surge, is the relative real estate price (compared to rentals, consumer prices and
construction costs), which is only weakly mitigated by the increased affordability of home
ownership. Of note, the overvaluation evident in the indicator does not suggest that an abrupt
price correction will occur in the near future. Rather, such imbalances may subside gradually,
as happened in the wake of the price hikes experienced in the early 1990s. For Austria overall,
the indicator points to a persistent 6% undervaluation, despite a recent uptick in prices.
Diminishing loan growth and declining household indebtedness suggest that a high percentage
of equity financing is being used in property investments. At present, therefore, the recent
increases of residential property prices in Vienna and Austria do not pose a serious threat to
financial stability. Classification-JEL: G12, R31 Keywords: residential property prices, indicator, Austria, Vienna Pages: 29-46 Year: 2013 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:fcfbb8e9-075f-4899-946f-3d04e5f06a10/mop_2013_q4_analyses2.pdf File-Format: application/pdf File-Size: 846 kb Handle: RePEc:onb:oenbmp:y:2013:i:4:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Markus Knell Author-Name-First: Markus Author-Name-Last: Knell Author-Email: markus.knell@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7218 Author-Workplace-Fax: +43-1-40420-7299 Title: The Austrian System of Individual Pension Accounts – An Unfinished Symphony Abstract: The new Austrian pension system based on individual accounts is a clear improvement over
the former system. A serious shortcoming of the new system, however, is that it does not react to demographic changes, in particular to increases in life expectancy. I contrast the Austrian and the Swedish pension account systems to demonstrate how and why the latter is able to react to demographic changes. I also show how the Austrian system could be adapted to include such an automatic adjustment mechanism. In particular, this would require a continuous modification of the “key formula” 80/65/45 (80% replacement rate after 45 contribution years at a retirement age of 65). In a next step I argue why an increase in the average retirement age seems to be the most appropriate and viable reaction to the increase in life expectancy and why alternative adjustment policies have their limits. Finally, I discuss some commonly expressed objections to this adjustment strategy. I also sketch how a system of individual accounts could be amended in order to take some of these objections into account. Classification-JEL: H55, J1, J26 Keywords: pension system, demographic change, life expectancy Pages: 47-62 Year: 2013 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:47a08602-1371-409d-949e-8c07b0f7ef96/mop_2013_q4_analyses3.pdf File-Format: application/pdf File-Size: 308 kb Handle: RePEc:onb:oenbmp:y:2013:i:4:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Title: Austrian Economy to Grow by 0.5% in 2013 Pages: 6–11 Year: 2013 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:7a21017a-b616-4039-bdd4-d5589bd6c736/mop_2013_q3_analyse1.pdf File-Format: application/pdf File-Size: 1116 kb Handle: RePEc:onb:oenbmp:y:2013:i:3:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Pirmin Fessler Author-Name-First: Pirmin Author-Name-Last: Fessler Author-Email: Pirmin.Fessler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Friedrich Fritzer Author-Name-First: Friedrich Author-Name-Last: Fritzer Author-Email: friedrich.fritzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7417 Title: The Distribution of Inflation among Austrian Households Abstract: We estimate the distribution of household-level inflation and show a strong and stable negative relationship between income and inflation that reflects the differences in consumption bundles along the income distribution (2010–2012). Inflation decreases as education levels increase. It is especially high for blue-collar worker households and extraordinarily low for farmer households and shows a u-shaped relationship with age. Our findings question the exclusive focus of economic policymakers on the consumer price index based on a mean consumption bundle in times of diverging price developments. We advocate monitoring inflation of a broader range of real household level consumption bundles, such as inflation across the entire range of household incomes. We use the Austrian consumer survey (2009/10) as well as disaggregated price data to calculate inflation for given consumption bundles at the household level. Classification-JEL: E31, C43, C81 Keywords: Inflation, household specific inflation, microdata, distribution Pages: 12–28 Year: 2013 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:17a92972-3d27-480a-a939-f859b6413505/mop_2013_q3_analyse2.pdf File-Format: application/pdf File-Size: 2028 kb Handle: RePEc:onb:oenbmp:y:2013:i:3:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Christina Burger Author-Name-First: Christina Author-Name-Last: Burger Author-Email: christina.burger@bmwfj.gv.at Author-Workplace-Name: Austrian Federal Ministry of Economy, Family and Youth Author-Name: Katharina Wolner-Rößlhuber Author-Name-First: Katharina Author-Name-Last: Wolner-Rößlhuber Author-Email: katharina.wolner-roesslhuber@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Internet Payment Behavior in Austria Classification-JEL: E58, D12, O33 Keywords: payment behavior, online payment means, e-commerce Pages: 29–41 Year: 2013 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:b805576a-4a7b-4b0a-99d3-c2704ec56351/mop_2013_q3_analyse3.pdf File-Format: application/pdf File-Size: 659 kb Handle: RePEc:onb:oenbmp:y:2013:i:3:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Klaus Vondra Author-Name-First: Klaus Author-Name-Last: Vondra Author-Email: klaus.vondra@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Robust Recovery Remains Elusive Pages: 6–28 Year: 2013 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:2e090865-de27-4a86-bd2c-6a9eef660935/mop_2013_q2_analyse1_tcm16-256829.pdf File-Format: application/pdf File-Size: 1353 kb Handle: RePEc:onb:oenbmp:y:2013:i:2:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Pirmin Fessler Author-Name-First: Pirmin Author-Name-Last: Fessler Author-Email: Pirmin.Fessler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Martin Schürz Author-Name-First: Martin Author-Name-Last: Schürz Author-Email: martin.schuerz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Cross-Country Comparability of the Eurosystem Household Finance and Consumption Survey Abstract: The ECB recently published the first results of the euro area Household Finance and Consumption Survey (HFCS) and a report on the methodologies applied (ECB, 2013a and 2013b). The fact that the HFCS results vary considerably across the euro area gives rise to questions regarding their comparability. We question the focus on mean and median country rankings and argue for comparisons along the full unconditional net wealth distributions. Such analyses reveal large within-country variation as well as remarkable similarities between countries with regard to the distributions of net wealth. We discuss the relevance of household size and homeownership in this context and point out important caveats with regard to the interpretation of results. In the appendix we summarize relevant methodological differences which need to be taken into account in case of cross-country comparisons. Classification-JEL: D12, D14, D31 Keywords: net wealth, HFCS, inequality, distribution, data comparability, survey data Pages: 29–50 Year: 2013 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:20f20ae1-327b-4ceb-8bcc-a96419ad999d/mop_2013_q2_analyse2_tcm16-256830.pdf File-Format: application/pdf File-Size: 722 kb Handle: RePEc:onb:oenbmp:y:2013:i:2:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Johannes Holler Author-Name-First: Johannes Author-Name-Last: Holler Author-Email: johannes.holler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Funding Strategies of Sovereign Debt Management: A Risk Focus Abstract: Most sovereign debt management agencies operate on a narrow definition of risk which does not reflect the potential of sovereign debt portfolios to insure the budget against macroeconomic shocks. This paper analyzes the different forms of risk implied by the composition of the sovereign debt portfolio and discusses methods for their evaluation. By determining the risk properties of existing debt management instruments we underline the potential of certain debt management instruments to insure the budget against stylized demand and supply shocks producing strong incentives for debt management agencies to operate on a broader definition of risk. The identified risk properties further highlight that the establishment of Economic and Monetary Union reduced market, rollover and liquidity risk in the aggregate euro area debt portfolio, whereas the loss of the risk free status for euro area sovereign assets and the steepening of the yield curve, both triggered by the sovereign debt crisis, led to a shift towards more short-term debt resulting in an increase in rollover risk and market risk. Classification-JEL: H63, E62 Keywords: sovereign debt management, portfolio optimization, fiscal insurance theory Pages: 51–74 Year: 2013 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:a72c8033-c9a8-462f-b026-f57355af1f8a/mop_2013_q2_analyse3_tcm16-256831.pdf File-Format: application/pdf File-Size: 2132 kb Handle: RePEc:onb:oenbmp:y:2013:i:2:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Martin Gächter Author-Name-First: Martin Author-Name-Last: Gächter Author-Email: martin.gaechter@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Foreign Research Division Author-Name: Hanno Lorenz Author-Name-First: Hanno Author-Name-Last: Lorenz Author-Email: hanno_lorenz@gmx.de Author-Workplace-Name: University of Vienna Author-Name: Paul Ramskogler Author-Name-First: Paul Author-Name-Last: Ramskogler Author-Email: paul.ramskogler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Foreign Research Division Author-Name: Maria Antoinette Silgoner Author-Name-First: Maria Antoinette Author-Name-Last: Silgoner Author-Email: Maria.Silgoner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: An Export-Based Measure of Competitiveness Abstract: Unit labor cost (ULC) developments have been receiving increased attention from policymakers throughout the euro area, as adverse developments in price competitiveness are commonly seen as one of the causes of the ongoing sovereign debt crisis in the euro area. Yet empirical results are often ambiguous on the link between ULC developments and export performance. This widely examined empirical conundrum, often referred to as “Kaldor paradox,” naturally raises the question whether commonly used measures of ULC growth (such as total economy ULC) are a meaningful measure of mounting imbalances and persistent losses of trade competitiveness. Therefore, we propose a new ULC growth index that exploits disaggregated sectoral information and focuses on export-relevant sectors only. This trade-weighted ULC index is shown to have a substantially higher explanatory power for export growth than traditional ULC measures. Classification-JEL: F14, J30 Keywords: unit labor costs, competitiveness, export growth Pages: 75–92 Year: 2013 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:cb670410-76aa-4f96-a647-213018855bc1/mop_2013_q2_analyse4_tcm16-256832.pdf File-Format: application/pdf File-Size: 2135 kb Handle: RePEc:onb:oenbmp:y:2013:i:2:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Walpurga Köhler-Töglhofer Author-Name-First: Walpurga Author-Name-Last: Köhler-Töglhofer Author-Email: walpurga.koehler-toeglhofer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Christa Magerl Author-Name-First: Christa Author-Name-Last: Magerl Author-Email: christa.magerl@wifo.ac.at Author-Workplace-Name: Austrian Institute of Economic Research Title: Revision of Price/Cost Competitiveness Indicators for Austria Abstract: The issue of short-term competitiveness, i.e. price and cost competitiveness, has moved to center stage in the economic policy debate amid the economic crisis. Within the Eurosystem, the various indicators that are used to monitor short-term competitiveness are revised at regular intervals by the ECB and national compilers. In Austria, these indicators are compiled by the OeNB in cooperation with WIFO, the Austrian Institute of Economic Research. The regular revisions are meant to ensure that the indicators adequately reflect changing country specific trade patterns, remain useful measures and continue to be internationally comparable. In the revision undertaken in 2013, the basic conceptual framework was left unchanged in as much as the typical building blocks of the Austrian competitiveness indicator have been retained. At the same time, a number of adjustments were made: The previously fixed country weights were replaced by variable weights based on non-overlapping three-year periods, the underlying samples of trading partners and competing countries were adjusted, a services subindex was substituted for the existing travel and tourism subindex, and two new competitiveness indicators were added to enable cross-checks with the traditional consumer pricebased measures. The two additions are, first, a new price competitiveness indicator for the manufacturing industry, based on relative producer prices and second, a new cost competitiveness indicator for the Austrian economy and the services industry, based on relative unit labor costs of the total economy. The revised set of indicators shows that Austria’s price and cost competitiveness has improved continually over the past decade and a half, with manufacturing exporters experiencing stronger gains in competitiveness than other areas of the economy. Services providers have also become evidently more competitive since the beginning of 1999. Here, the improvement is found to be larger when we take into account changes in the HICP/ CPI rather than total unit labor costs. Classification-JEL: F3, F4 Keywords: effective exchange rates, price/cost competitiveness, (harmonized) competitiveness indicators, manufacturing sector, services sector, trade weights, third-market effects Pages: 93–119 Year: 2013 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:83808cec-7e32-47ff-a92b-e1826c2ed88a/mop_2013_q2_analyse5_tcm16-256833.pdf File-Format: application/pdf File-Size: 1904 kb Handle: RePEc:onb:oenbmp:y:2013:i:2:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Klaus Vondra Author-Name-First: Klaus Author-Name-Last: Vondra Author-Email: klaus.vondra@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Austria Withstands Recession: Return to Positive Growth in Early 2013 Pages: 6–11 Year: 2013 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:03e76041-1572-4378-9136-ad7772a2f273/mop_2013_q1_analyses1_tcm16-254580.pdf File-Format: application/pdf File-Size: 1161 kb Handle: RePEc:onb:oenbmp:y:2013:i:1:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Lukas Reiss Author-Name-First: Lukas Author-Name-Last: Reiss Author-Email: lukas.reiss@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Structural Budget Balances: Calculation, Problems and Benefits Abstract: The reform of the Stability and Growth Pact and the incorporation of “debt brake” rules into national legislation have heavily increased the importance of structural balances in economic policymaking in Europe. As defined by the European Commission, structural balances are calculated by subtracting the estimated cyclical component of government revenue and spending as well as certain temporary factors from the headline balance. Structural balance estimates can be subject to significant measurement errors, which are mainly related to uncertainties about potential output and nonlinear reactions of tax revenue to sharp changes in GDP growth. The definition of temporary factors can also cause substantial problems. While these problems do not render structural balances useless for the implementation of fiscal policy, they imply that policymakers should not aim to reach the target values for the structural balance exactly a specified each year, but rather on average over much longer time periods (unless exceptionality clauses apply). Achieving the targets on average can be ensured by using appropriately specified control accounts. Classification-JEL: E62, H6 Keywords: structural balance, cyclically adjusted balance, fiscal rules, fiscal policy Pages: 12–28 Year: 2013 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:a7bfaa1f-7573-44f9-9872-37b4e5aa8643/mop_2013_q1_analyses2_tcm16-254583.pdf File-Format: application/pdf File-Size: 2019 kb Handle: RePEc:onb:oenbmp:y:2013:i:1:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Alfred Stiglbauer Author-Name-First: Alfred Author-Name-Last: Stiglbauer Author-Email: alfred.stiglbauer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7435 Title: Effective Retirement Age in Austria – A Review of Changes since 2000 Abstract: Increases in life expectancy, lower birthrates and the aging of the baby-boom generation call for measures to increase the effective retirement age. In Austria, the employment rate of older workers rose from 28.8% to 41.4% between 2000 and 2011, which would imply substantial progress in keeping older workers in employment. Yet social security statistics indicate that the average pension entry age has barely risen in the past decade and that it remains stuck considerably below the statutory age. How can these differing developments be reconciled? By discussing various concepts of the effective retirement age, this article finds that the discrepancy can be largely explained by adjusting the conventional statistical measures in several ways. After accounting for such effects it becomes clear that the average retirement age has indeed risen. Classification-JEL: J11, J26 Keywords: retirement, effective retirement age, public pensions Pages: 29–49 Year: 2013 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:824e7f89-03fa-43a6-b41f-d633d39cbbc2/mop_2013_q1_analyses3_tcm16-254584.pdf File-Format: application/pdf File-Size: 1699 kb Handle: RePEc:onb:oenbmp:y:2013:i:1:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Austria Prevails in Bleak Environment Pages: 6–31 Year: 2012 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:01e9340b-155d-41c8-a0f6-f87a7f8422c9/mop_2012_q4_analyses1_tcm16-253966.pdf File-Format: application/pdf File-Size: 1805 kb Handle: RePEc:onb:oenbmp:y:2012:i:4:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Martin Handig Author-Name-First: Martin Author-Name-Last: Handig Author-Email: martin.handig@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Financial Statements and Treasury Risk Monitoring Division Author-Name: Clemens Jobst Author-Name-First: Clemens Author-Name-Last: Jobst Author-Email: clemens.jobst@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Doris Schneeberger Author-Name-First: Doris Author-Name-Last: Schneeberger Author-Email: doris.schneeberger@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Cash and Payment Systems Management Title: The Cross-Border Movement of Euro Banknotes and Austria’s TARGET 2 Liabilities Abstract: In the public and academic discussion on the payment system TARGET2, the high claims and liabilities of some euro area countries have mostly been associated with the financial crisis. The implicit assumption that TARGET2 balances would be close to zero without the financial crisis is both theoretically and empirically wrong, though. This study looks into the payment mechanisms that have caused the TARGET2 liabilities of the Oesterreichische Nationalbank (OeNB) to rise to a substantial level over the past ten years. The increase can be attributed to a structurally-induced inflow of banknotes to the OeNB, which is partly due to tourism but above all to the physical shipment of euro cash from countries outside monetary union into Austria. This central bank money, which comes to Austria as cash, leaves the country in cashless form, causing an equivalent increase in the OeNB’s TARGET2 liabilities. Structurally induced in- and outflows of central bank money (in cashless form or as banknotes) can be observed in other euro area countries, too. Understanding these flows is essential for a correct interpretation of TARGET2 balances during and after the current crisis. Classification-JEL: E42, E52, E58, F32, F33 Keywords: Austria, EMU, TARGET2, currency abroad, banknote migration, balance of payments, payment system, financial crisis Pages: 32–52 Year: 2012 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:fa3ae898-abd6-4ced-8d85-4f717820e34e/mop_2012_q4_analyses2_tcm16-253967.pdf File-Format: application/pdf File-Size: 2204 kb Handle: RePEc:onb:oenbmp:y:2012:i:4:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Peter Mooslechner Author-Name-First: Peter Author-Name-Last: Mooslechner Author-Email: peter.mooslechner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Helmut Stix Author-Name-First: Helmut Author-Name-Last: Stix Author-Email: helmut.stix@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43(1)404-20-7211 Author-Workplace-Fax: +43(1)404-20-7299 Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: The Use of Payment Instruments in Austria - A Study Based on Survey Data from 1996 to 2011 Abstract: This study analyzes the results of the OeNB’s methods-of-payment survey of fall 2011 and compares them with the results of similar surveys from the years 1996, 2000 and 2005. The rapid development of cashless payment options in the 15 years that have passed between the first and last analyzed survey and the more widespread availability of payment cards raise the question how consumer behavior has changed. With a value share of some 65% of total payments, cash still remains the most important payment instrument. Debit cards have also risen in importance (to some 25%). While the share of debit card payments doubled between 2000 and 2005, their recent increase was far less significant. The value share of credit cards remains low at 5%. Even though the use of payment instruments varies with education, income and age, in terms of value more than 50% of all payments are still made in cash in each of these sociodemographic subgroups. By contrast, gender and the size of a resident’s home town do not have much impact on the use of cash. The use of payment instruments is determined by two further factors: the size of the payment and the type of the purchase. It is shown that card payments increased markedly in the period from 1996 to 2011 primarily for amounts exceeding EUR 20. Still, cash continues to be used intensively for larger-value payments as well, and it still accounts for a large share of payments in both the food and services sectors, as well as in restaurants and hotels. By international comparison, Austrian payments are shown to be very cash-intensive. The available data suggest that this situation is not solely the result of a low POS terminal density. Rather, this tendency may also be attributable to the fact that Austrian consumers have a positive view of cash. Moreover, a relatively high ATM density and the possibility to withdraw cash free of charge may positively influence the use of cash. On the supply side, the survey results indicate that card acceptance is low for small-value payments. Classification-JEL: E41, E58, D12 Keywords: usage of payment means, payment behavior, retail payments, demand for money, survey data Pages: 53–77 Year: 2012 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:d08c01b5-ae98-4ee0-9fcf-a105db1ecff5/mop_2012_q4_analyses3.pdf File-Format: application/pdf File-Size: 1332 kb Handle: RePEc:onb:oenbmp:y:2012:i:4:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Beer Author-Name-First: Christian Author-Name-Last: Beer Author-Email: chbeer@wu-wien.ac.at Author-Workplace-Name: Vienna University of Economics and Business Administration Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Housing Cost Burden of Austrian Households: Results of a Recent Survey Abstract: This article presents the results of a survey carried out in spring 2012 to determine the level of housing costs incurred by Austrian households. The housing cost survey shows that the share of housing costs borne by homeowners (loan repayment plus operating expenses and energy costs) accounts for 25% (median: 19%) of their net household income and is thus far lower than that borne by tenants (rent plus operating expenses and energy costs), which accounts for 34% (median: 29%) of tenants’ income. The burden of housing costs is significant in the lowest income quartile, in particular (tenants: 51% of their net household income, homeowners: 44%). This study compares the results of this survey with those of a comparable survey that was carried out in 2008. The results show that the share of housing costs as a percentage of income increased by 2 to 6 percentage points during the previous four years. The second part of this article analyzes the vulnerability of households. About 6% of households (8% of tenants, 38% of the unemployed and 12% in the lowest income quartile) state that they were in arrears with rent payments or operating expenses in the previous 12 months on at least one occasion owing to financial constraints. Around one-third of tenants are obliged to restrict their consumption to cover their housing costs. Classification-JEL: D14, D31, R21, R31, R38 Keywords: housing, housing costs, housing cost burden, housing finance Pages: 78–89 Year: 2012 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:a6051218-d24e-4990-9725-5d10675bd756/mop_2012_q4_analyses4_tcm16-253970.pdf File-Format: application/pdf File-Size: 1435 kb Handle: RePEc:onb:oenbmp:y:2012:i:4:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Burkhard Raunig Author-Name-First: Burkhard Author-Name-Last: Raunig Author-Email: Burkhard.Raunig@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7219 Author-Workplace-Fax: +43-1-40420-7299 Title: Financial Markets and Real Economic Activity Abstract: The current crisis has once more shown that financial markets and the real economy can strongly interact. This experience has sparked renewed interest in research on the linkages between financial markets and real economic activity. On September 28, 2012, the Oesterreichische Nationalbank hosted a workshop on this timely and important topic. This article provides a brief summary of the research that was presented at the workshop. Pages: 92–95 Year: 2012 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:1e252605-d9ed-4101-b975-e58625b8f17f/mop_2012_q4_event_wrap_ups_tcm16-253971.pdf File-Format: application/pdf File-Size: 827 kb Handle: RePEc:onb:oenbmp:y:2012:i:4:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Isabella Moder Author-Name-First: Isabella Author-Name-Last: Moder Author-Email: isabella.moder@oenb.at Author-Workplace-Name: Foreign Research Division Author-Name: Maria Antoinette Silgoner Author-Name-First: Maria Antoinette Author-Name-Last: Silgoner Author-Email: Maria.Silgoner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Sovereign Debt Crisis Delays Economic Recovery Abstract: The U.S. economic recovery lost steam in the first half of 2012. Whereas positive signals have been coming from the real estate sector in recent months, the uptrend in the labor market has not gained a stable foothold yet. Up to now, domestic demand has been the main engine of economic growth. However, the envisaged drastic fiscal consolidation could considerably dampen consumer spending and investment. Japan’s economic growth also slowed down noticeably in the second quarter of 2012, which may be pinpointed to a large extent to the expiration of subsidies for the purchase of eco-friendly cars. In the next few years, Japan will have to tackle the reduction of its debt ratio (2013: 220% of GDP). The value added tax is already scheduled to be raised to 10%. The Chinese government and the People’s Bank of China reacted to the significant cooling of the Chinese economy by taking expansionary fiscal and monetary policy measures. The IMF projects a “soft landing” for the Chinese economy. In the euro area, economic output diminished by 0.2% in the second quarter. The economy has not moved into a recession yet, but the current decline in the leading indicators along with the available forecasts presage a slight drop in growth in the third quarter of 2012 as well. The recovery is expected to take hold no earlier than around the turn of the year 2012 to 2013. Developments within the euro area remain quite heterogeneous. The motor of growth so far, the German economy, is increasingly losing momentum. The downtrend in inflation came to a halt in August 2012. In addition to increases in taxes and fees, which drive inflation upward, world market prices for food have been surging recently. In July 2012, the Governing Council of the ECB cut key interest rates by 25 basis points, bringing the interest rate on main refinancing operations to a historical low of 0.75%. In early September 2012, the Governing Council of the ECB initiated a new government bond purchase program, so-called Outright Monetary Transactions (OMTs). Under the OMT program, the Eurosystem may make secondary market purchases, limited neither by volume nor by time, of sovereign bonds issued by countries that are eligible for and have applied for EFSF/ESM support for their macroeconomic adjustment programs. Together with the envisaged steps toward a banking union, this measure is an important element in calming the markets and thus in resolving the government debt crisis. Quarter-on-quarter economic growth in the Central, Eastern and Southeastern European (CESEE) Member States was slightly positive in the first two quarters of 2012, and growth in the region is projected to quicken in 2013. Inflation was fueled most heavily by energy prices, but eased noticeably in the course of the first half of 2012. The region’s external balances performed quite heterogeneously, but any deficits registered in the combined current and capital accounts were moderate in size. Conditions in the financial markets have stabilized noticeably in all countries except Slovenia since the beginning of June 2012. The Austrian economy is increasingly affected by the economic slack in Europe. Whereas GDP growth was still surprisingly powerful in the first quarter of 2012, coming to 0.5% (seasonally and working-day adjusted, quarter on quarter), it came to a near standstill in the second quarter (+0.1%). Most of the leading indicators which have come in are negative and signal below-average growth in the next few months. Nevertheless, given the strong economic performance in the first quarter of 2012, the 0.9% growth forecast in the June 2012 economic outlook of the Oesterreichische Nationalbank (OeNB) for 2012 could yet hold true. The risks to economic activity in 2013 would, however, rise considerably if growth weakened further in the second half of 2012. Pages: 5–22 Year: 2012 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:866cc51e-64eb-4c94-a6aa-8c52852b1bce/mop_2012_q3_konjunktur_tcm16-251584.pdf File-Format: application/pdf File-Size: 2192 kb Handle: RePEc:onb:oenbmp:y:2012:i:3:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Pirmin Fessler Author-Name-First: Pirmin Author-Name-Last: Fessler Author-Email: Pirmin.Fessler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Peter Mooslechner Author-Name-First: Peter Author-Name-Last: Mooslechner Author-Email: peter.mooslechner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Martin Schürz Author-Name-First: Martin Author-Name-Last: Schürz Author-Email: martin.schuerz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Eurosystem Household Finance and Consumption Survey 2010 First Results for Austria Abstract: This report provides the first results of the Eurosystem Household Finance and Consumption Survey (HFCS) for Austria. The HFCS covers households’ real assets, financial assets and debt, thereby for the first time allowing an analysis of Austrian households’ net wealth. The rich data on which the HFCS is based facilitate the analysis of a multitude of issues relevant to monetary policy and financial stability. The main objective of this report is to describe net wealth and the underlying household assets and liabilities in Austria. Additionally, it looks into the relationship between a number of key socio-economic characteristics of households and net wealth. Finally, the study gives brief insights on debt, inheritances, savings and consumption. Pages: 23–62 Year: 2012 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:d58db524-3136-4b05-8045-32c7613a6409/mop_2012_q3_in_focus_tcm16-251583.pdf File-Format: application/pdf File-Size: 3002 kb Handle: RePEc:onb:oenbmp:y:2012:i:3:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Nicolas Albacete Author-Name-First: Nicolas Author-Name-Last: Albacete Author-Email: Nicolas.Albacete@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Peter Lindner Author-Name-First: Peter Author-Name-Last: Lindner Author-Email: peter.lindner@oenb.at Author-Workplace-Name: Economic Analysis Division Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Siegfried Zottel Author-Name-First: Siegfried Author-Name-Last: Zottel Author-Email: siegfried.zottel@oenb.at Author-Workplace-Name: Oesterreicische Nationalbank Title: Key Facts of the HFCS in Austria Pages: 4–6 Year: 2012 Issue: 0 File-URL: https://www.oenb.at/dam/jcr:98e91ae9-a027-4fd5-885e-bb7dbcefd5e9/mop_2013_q3_methodenband_key_facts_tcm16-255047.pdf File-Format: application/pdf File-Size: 1361 kb Handle: RePEc:onb:oenbmp:y:2012:i:0:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Nicolas Albacete Author-Name-First: Nicolas Author-Name-Last: Albacete Author-Email: Nicolas.Albacete@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Peter Lindner Author-Name-First: Peter Author-Name-Last: Lindner Author-Email: peter.lindner@oenb.at Author-Workplace-Name: Economic Analysis Division Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Siegfried Zottel Author-Name-First: Siegfried Author-Name-Last: Zottel Author-Email: siegfried.zottel@oenb.at Author-Workplace-Name: Oesterreicische Nationalbank Title: Introduction Year: 2012 Issue: 0 Price: 7–8 File-URL: https://www.oenb.at/dam/jcr:54a7431c-d788-4dec-8b91-c40d32980880/mop_2013_q3_methodenband_kapitel1_tcm16-255037.pdf File-Format: application/pdf File-Size: 1755 kb Handle: RePEc:onb:oenbmp:y:2012:i:0:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Nicolas Albacete Author-Name-First: Nicolas Author-Name-Last: Albacete Author-Email: Nicolas.Albacete@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Peter Lindner Author-Name-First: Peter Author-Name-Last: Lindner Author-Email: peter.lindner@oenb.at Author-Workplace-Name: Economic Analysis Division Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Siegfried Zottel Author-Name-First: Siegfried Author-Name-Last: Zottel Author-Email: siegfried.zottel@oenb.at Author-Workplace-Name: Oesterreicische Nationalbank Title: Questionnaire – methodological notes Pages: 9–20 Year: 2012 Issue: 0 File-URL: https://www.oenb.at/dam/jcr:782a3e96-c1a3-4009-8887-50dec96684e3/mop_2013_q3_methodenband_kapitel2_tcm16-255038.pdf File-Format: application/pdf File-Size: 1594 kb Handle: RePEc:onb:oenbmp:y:2012:i:0:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Nicolas Albacete Author-Name-First: Nicolas Author-Name-Last: Albacete Author-Email: Nicolas.Albacete@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Peter Lindner Author-Name-First: Peter Author-Name-Last: Lindner Author-Email: peter.lindner@oenb.at Author-Workplace-Name: Economic Analysis Division Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Siegfried Zottel Author-Name-First: Siegfried Author-Name-Last: Zottel Author-Email: siegfried.zottel@oenb.at Author-Workplace-Name: Oesterreicische Nationalbank Title: Interviewers Pages: 21–27 Year: 2012 Issue: 0 File-URL: https://www.oenb.at/dam/jcr:ca262924-fe22-4feb-9649-ba811b341c39/mop_2013_q3_methodenband_kapitel3_tcm16-255039.pdf File-Format: application/pdf File-Size: 1336 kb Handle: RePEc:onb:oenbmp:y:2012:i:0:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Nicolas Albacete Author-Name-First: Nicolas Author-Name-Last: Albacete Author-Email: Nicolas.Albacete@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Peter Lindner Author-Name-First: Peter Author-Name-Last: Lindner Author-Email: peter.lindner@oenb.at Author-Workplace-Name: Economic Analysis Division Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Siegfried Zottel Author-Name-First: Siegfried Author-Name-Last: Zottel Author-Email: siegfried.zottel@oenb.at Author-Workplace-Name: Oesterreicische Nationalbank Title: Consistency Checks and Editing Pages: 28–46 Year: 2013 Issue: 0 File-URL: https://www.oenb.at/dam/jcr:ee026243-a9cc-47b5-be27-6acb781953ec/mop_2013_q3_methodenband_kapitel4_tcm16-255040.pdf File-Format: application/pdf File-Size: 1542 kb Handle: RePEc:onb:oenbmp:y:2013:i:0:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Nicolas Albacete Author-Name-First: Nicolas Author-Name-Last: Albacete Author-Email: Nicolas.Albacete@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Peter Lindner Author-Name-First: Peter Author-Name-Last: Lindner Author-Email: peter.lindner@oenb.at Author-Workplace-Name: Economic Analysis Division Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Siegfried Zottel Author-Name-First: Siegfried Author-Name-Last: Zottel Author-Email: siegfried.zottel@oenb.at Author-Workplace-Name: Oesterreicische Nationalbank Title: Multiple Imputations Pages: 47–60 Year: 2012 Issue: 0 File-URL: https://www.oenb.at/dam/jcr:b8b76407-7b9b-4634-a401-1ab3eef072b4/mop_2013_q3_methodenband_kapitel5_tcm16-255041.pdf File-Format: application/pdf File-Size: 1576 kb Handle: RePEc:onb:oenbmp:y:2012:i:0:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Nicolas Albacete Author-Name-First: Nicolas Author-Name-Last: Albacete Author-Email: Nicolas.Albacete@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Peter Lindner Author-Name-First: Peter Author-Name-Last: Lindner Author-Email: peter.lindner@oenb.at Author-Workplace-Name: Economic Analysis Division Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Siegfried Zottel Author-Name-First: Siegfried Author-Name-Last: Zottel Author-Email: siegfried.zottel@oenb.at Author-Workplace-Name: Oesterreicische Nationalbank Title: Sampling Pages: 61–69 Year: 2012 Issue: 0 File-URL: https://www.oenb.at/dam/jcr:ca163d1e-c215-4ea9-b1e9-8857d6177a07/mop_2013_q3_methodenband_kapitel6_tcm16-255042.pdf File-Format: application/pdf File-Size: 1895 kb Handle: RePEc:onb:oenbmp:y:2012:i:0:b:7 Template-Type: ReDIF-Article 1.0 Author-Name: Nicolas Albacete Author-Name-First: Nicolas Author-Name-Last: Albacete Author-Email: Nicolas.Albacete@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Peter Lindner Author-Name-First: Peter Author-Name-Last: Lindner Author-Email: peter.lindner@oenb.at Author-Workplace-Name: Economic Analysis Division Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Siegfried Zottel Author-Name-First: Siegfried Author-Name-Last: Zottel Author-Email: siegfried.zottel@oenb.at Author-Workplace-Name: Oesterreicische Nationalbank Title: Construction of Survey Weights Year: 2012 Issue: 0 File-URL: https://www.oenb.at/dam/jcr:7dc46b0f-5129-4763-9c88-94bb663413aa/mop_2013_q3_methodenband_kapitel7_tcm16-255043.pdf File-Format: application/pdf File-Size: 1640 kb Handle: RePEc:onb:oenbmp:y:2012:i:0:b:8 Template-Type: ReDIF-Article 1.0 Author-Name: Nicolas Albacete Author-Name-First: Nicolas Author-Name-Last: Albacete Author-Email: Nicolas.Albacete@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Peter Lindner Author-Name-First: Peter Author-Name-Last: Lindner Author-Email: peter.lindner@oenb.at Author-Workplace-Name: Economic Analysis Division Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Siegfried Zottel Author-Name-First: Siegfried Author-Name-Last: Zottel Author-Email: siegfried.zottel@oenb.at Author-Workplace-Name: Oesterreicische Nationalbank Title: Construction of Replicate Weights for Variance Estimation Pages: 80–83 Year: 2012 Issue: 0 File-URL: https://www.oenb.at/dam/jcr:588d8604-6f42-4e18-a2af-44d5861816ab/mop_2013_q3_methodenband_kapitel8_tcm16-255044.pdf File-Format: application/pdf File-Size: 1439 kb Handle: RePEc:onb:oenbmp:y:2012:i:0:b:9 Template-Type: ReDIF-Article 1.0 Author-Name: Nicolas Albacete Author-Name-First: Nicolas Author-Name-Last: Albacete Author-Email: Nicolas.Albacete@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Peter Lindner Author-Name-First: Peter Author-Name-Last: Lindner Author-Email: peter.lindner@oenb.at Author-Workplace-Name: Economic Analysis Division Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Siegfried Zottel Author-Name-First: Siegfried Author-Name-Last: Zottel Author-Email: siegfried.zottel@oenb.at Author-Workplace-Name: Oesterreicische Nationalbank Title: User Guide Pages: 84–91 Year: 2012 Issue: 0 File-URL: https://www.oenb.at/dam/jcr:4ecd242d-0975-4244-a835-7e4294ab2fbc/mop_2013_q3_methodenband_kapitel9_tcm16-255045.pdf File-Format: application/pdf File-Size: 1497 kb Handle: RePEc:onb:oenbmp:y:2012:i:0:b:10 Template-Type: ReDIF-Article 1.0 Author-Name: Nicolas Albacete Author-Name-First: Nicolas Author-Name-Last: Albacete Author-Email: Nicolas.Albacete@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Peter Lindner Author-Name-First: Peter Author-Name-Last: Lindner Author-Email: peter.lindner@oenb.at Author-Workplace-Name: Economic Analysis Division Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Siegfried Zottel Author-Name-First: Siegfried Author-Name-Last: Zottel Author-Email: siegfried.zottel@oenb.at Author-Workplace-Name: Oesterreicische Nationalbank Title: References Pages: 92–93 Year: 2012 Issue: 0 File-URL: https://www.oenb.at/dam/jcr:adbcf8c2-7ea9-43e2-a331-e49b4e063252/mop_2013_q3_methodenband_kapitel10_tcm16-255046.pdf File-Format: application/pdf File-Size: 1307 kb Handle: RePEc:onb:oenbmp:y:2012:i:0:b:11 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Klaus Vondra Author-Name-First: Klaus Author-Name-Last: Vondra Author-Email: klaus.vondra@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Austrian Economy Prevails in Bleak International Environment Pages: 6–32 Year: 2012 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:90286f1b-bd98-4afb-8b09-4d3a37fbd5bd/mop_2012_q2_prognose_tcm16-249559.pdf File-Format: application/pdf File-Size: 2706 kb Handle: RePEc:onb:oenbmp:y:2012:i:2:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Martin Gächter Author-Name-First: Martin Author-Name-Last: Gächter Author-Email: martin.gaechter@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Foreign Research Division Author-Name: Aleksandra Riedl Author-Name-First: Aleksandra Author-Name-Last: Riedl Author-Email: aleksandra.riedl@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Foreign Research Division Author-Name: Doris Ritzberger-Grünwald Author-Name-First: Doris Author-Name-Last: Ritzberger-Grünwald Author-Email: doris.ritzberger-gruenwald@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-5201 Author-Workplace-Fax: +43-1-40420-5299 Title: Business Cycle Synchronization in the Euro Area and the Impact of the Financial Crisis Abstract: The extent of synchronization of national business cycles is a widespread indicator for gauging whether individual countries are indeed ready to adopt a common currency. The occurrence of asymmetric shocks and their consequences in Economic and Monetary Union (EMU) may hamper implementation of monetary policy, as such shocks may significantly raise the cost of the single monetary policy for individual countries. This study analyzes whether the synchronization pattern of business cycles in the euro area has systematically changed since the outbreak of the global financial crisis in 2008. Country-specific differences in the terms of trade and fiscal imbalances may have caused the global shock to affect euro area countries asymmetrically. Conversely, the business cycles of individual countries may have become more closely synchronized, as all countries slipped into recession at the same time. For the purpose of this study we use empirical data to establish which of the two effects dominates. The results of the analysis show a pronounced desynchronization of business cycles during the crisis period, both with respect to dispersion and to the correlation of business cycles. Moreover, interesting differences and parallels may be observed between the developments since the beginning of the most recent financial crisis and an earlier period, around 2004, when the output gap in the euro area was negative as well. Classification-JEL: E32, E61, F02, F44 Keywords: Keywords: business cycles, European Monetary Union, convergence, financial crisis Pages: 33–60 Year: 2012 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:094e45fe-86e4-40b7-a14e-b550bcf177c5/mop_2012_q2_analyse02_tcm16-249562.pdf File-Format: application/pdf File-Size: 3269 kb Handle: RePEc:onb:oenbmp:y:2012:i:2:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Beer Author-Name-First: Christian Author-Name-Last: Beer Author-Email: christian.beer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Walter Waschiczek Author-Name-First: Walter Author-Name-Last: Waschiczek Author-Email: walter.waschiczek@oenb.at. Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Analyzing Corporate Loan Growth in Austria Using Bank Lending Survey Data Abstract: This paper contributes to the emerging literature that makes use of Bank Lending Survey (BLS) data to shed light on the determinants of the growth of loans to enterprises. We examine the relationship between loan growth and information from the BLS using Bayesian model averaging. Our results suggest that in Austria volumes of corporate loans mainly react to changes in demand whereas supply effects play only a minor role. Moreover, the current crisis did not impair bank lending to enterprises beyond its influence on credit standards and loan demand. We find no indication for a credit crunch as defined by Bernanke and Lown (1991) in Austria. The evidence is less clear with regard to the broader definition of credit crunch by Owens and Schreft (1993) that also takes into account non-price conditions. In addition, this paper discusses the concept of credit standards and some methodical issues that have to be taken into account when using BLS data to analyze loan developments. Classification-JEL: C23, E51, G21 Keywords: credit, lending standards, loan demand, bank lending survey Pages: 61–80 Year: 2012 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:d9c093b0-0340-4645-bc72-fc491bb65925/mop_2012_q2_analyse03_tcm16-249561.pdf File-Format: application/pdf File-Size: 3089 kb Handle: RePEc:onb:oenbmp:y:2012:i:2:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Michael Andreasch Author-Name-First: Michael Author-Name-Last: Andreasch Author-Email: michael.andreasch@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, External Statistics, Financial Accounts and Monetary and Financial Statistics Author-Name: Pirmin Fessler Author-Name-First: Pirmin Author-Name-Last: Fessler Author-Email: Pirmin.Fessler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Martin Schürz Author-Name-First: Martin Author-Name-Last: Schürz Author-Email: martin.schuerz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Savings Deposits in Austria – A Safety Net in Times of Crisis Abstract: Households, financial intermediaries and ultimately even businesses all rely on savings deposits. On the one hand, savings deposits constitute a central pillar of precautionary saving; they play an important role in individual saving for old age and provide a financial buffer against unexpected events. On the other hand, they provide the bedrock of funding for the banking system and thus help maintain the flow of credit from banks to businesses. This paper draws on a unique data set compiled by the Oesterreichische Nationalbank (OeNB), which covers all savings accounts that domestic nonbanks held with banks reporting to the OeNB in the review period. We are thus able to analyze the changes in the total volume of deposits and their distribution across different categories of size in the period from 2002 to 2011. Against this backdrop we highlight how the relative significance of smaller and larger accounts changed before and during the financial crisis, and we discuss what role the deposit insurance system as well as savings plans with building and loan associations played in this context. On balance, we find the share of savings deposits in households’ total financial wealth to have remained broadly stable; the allocation of funds to the individual categories was subject to visible changes, however. Classification-JEL: G00, G11, G21, G28, H31, H81 Keywords: deposits, safe assets, deposit insurance, Austria, financial stability Pages: 81–95 Year: 2012 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:a3ba1e00-8b24-42e9-a734-c9bf4606dc58/mop_2012_q2_analyse04_tcm16-249560.pdf File-Format: application/pdf File-Size: 2281 kb Handle: RePEc:onb:oenbmp:y:2012:i:2:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Author-Name: Josef Schreiner Author-Name-First: Josef Author-Name-Last: Schreiner Author-Email: josef.schreiner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Maria Antoinette Silgoner Author-Name-First: Maria Antoinette Author-Name-Last: Silgoner Author-Email: Maria.Silgoner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: The Economy has Bottomed Out Abstract: While Japan’s economy is showing the first signs of a hesitant recovery, the upturn already gained a foothold in the U.S. economy in the second half of 2011 on the back of robust domestic demand. Conditions in the labor market relaxed perceptibly, while the real estate market is still waiting for a rebound. The U.S. Federal Reserve System and the Bank of Japan changed their respective monetary policies at the beginning of 2012 to communicate their inflation goal clearly. At the same time, both central banks decided to keep their key interest rates at a historically low level for the time being. By contrast, China’s economy has lost momentum, prompting the Chinese central bank to start easing monetary policy. After the euro area economy had started to revive in the first half of 2011, conditions clouded over from mid-2011. In the fourth quarter of 2011, real GDP weakened by 0.3% against the previous quarter. With the consolidation measures required in all sectors dampening economic activity, net exports remained the only stable support for growth. In the first quarter of 2012, GDP is anticipated to decline marginally as well, but leading indicators signal that it will recover thereafter. Ongoing tensions in the bond markets that progressively spread to other financial market segments called for new monetary policy measures – the reduction of interest rates, the provision of additional long-term liquidity and the relaxation of the eligibility criteria for collateral. These measures along with the EU and international rescue packages as well as EU economic governance reforms eased tensions in the financial markets at the beginning of 2012 and restored confidence. Economic conditions deteriorated noticeably in the Central, Eastern and Southeastern European (CESEE) EU Member States until the turn of the year 2011 to 2012. In the fourth quarter of 2011, average growth in the region flagged markedly; many countries reported contracting growth. In recent months, signs of a trend reversal in the first quarter of 2012 have been mounting. However, if the rally continues beyond the first quarter of 2012, it will be very small. In 2011, the Austrian economy expanded by a stronger than expected +3.0%, but successively lost momentum in the course of the year. GDP growth, still above average in the first half of 2011, contracted slightly in the fourth quarter. Quite likely, the economy has already bottomed out. The OeNB’s Economic Indicator signals a stabilization of Austria’s economy for the first half of 2012. Despite the high employment growth recorded in 2011, which lasted into the beginning of 2012, unemployment rose somewhat. After peaking in fall 2011, inflation is currently subsiding notably. Classification-JEL: E2, E3, O1 Keywords: global outlook, euro area, Central, Eastern and Southeastern Europe, Austria Pages: 5–21 Year: 2012 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:caf8195b-e2ac-403f-b4d6-c3e82f53f6bc/mop_2012_q1_konjunktur_tcm16-246784.pdf File-Format: application/pdf File-Size: 2406 kb Handle: RePEc:onb:oenbmp:y:2012:i:1:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Alexandra Koch Author-Name-First: Alexandra Author-Name-Last: Koch Author-Email: alexandra.koch@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Cashier’s Division Author-Name: Doris Schneeberger Author-Name-First: Doris Author-Name-Last: Schneeberger Author-Email: doris.schneeberger@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Cash and Payment Systems Management Title: Euro Cash in Austria, Ten Years On Abstract: In the run-up to the euro launch, a number of key steps were taken to ensure the uninterrupted supply of notes and coins to the economy and the general public. After all, nearly 15 billion notes and 52 billion coins had to be delivered in due time in order to ensure their availability from January 1, 2002, onward in the participating countries. In Austria, the Oesterreichische Nationalbank shares the responsibility of supplying commercial banks with cash and of processing returned banknotes in accordance with ECB regulations – and thus of ensuring the quality of the euro and its counterfeit security – with an affiliated cash logistics company, GELDSERVICE AUSTRIA. When the financial crisis boosted the demand for cash, logistical reserve stocks enabled the Eurosystem to respond quickly. As a result, the volume of euro cash in circulation rose, as did U.S. dollar circulation. However, the overall value of euro notes and coins in circulation has consistently remained above that of the U.S. dollar since the end of 2006. The euro’s established role as an international transaction currency has resulted in approximately one-quarter more banknotes being processed in Austria than the volume required for the national market. Classification-JEL: M41 Keywords: currency in circulation, adjustment of banknotes in circulation, intra-Eurosystem balances, capital key Pages: 28–40 Year: 2012 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:75b044a5-eddf-4d26-b03a-73bfadf707cf/mop_2012_q1_in_focus2_tcm16-246786.pdf File-Format: application/pdf File-Size: 1784 kb Handle: RePEc:onb:oenbmp:y:2012:i:1:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Doris Ritzberger-Grünwald Author-Name-First: Doris Author-Name-Last: Ritzberger-Grünwald Author-Email: doris.ritzberger-gruenwald@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-5201 Author-Workplace-Fax: +43-1-40420-5299 Author-Name: Thomas Scheiber Author-Name-First: Thomas Author-Name-Last: Scheiber Author-Email: thomas.scheiber@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Foreign Research Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-5247 Author-Workplace-Fax: +43-1-40420-5299 Title: Euro Cash in Central, Eastern and Southeastern Europe Abstract: A considerable part of the euro banknotes issued since 2002 is in circulation in Central, Eastern and Southeastern European (CESEE) countries. This can be attributed to the fact that numerous economic agents resorted to currency substitution in a parallel safe haven currency during the crisis arising in the course of their countries’ transition to a market economy. On the other hand, euro cash holdings are related to some countries’ upcoming accession to the European Union, which will oblige them to adopt the euro. Although countries have caught up economically, the degree of euroization in CESEE countries has hardly receded over the past years. According to surveys conducted by the Oesterreichische Nationalbank (OeNB), economically significant amounts of euro cash are primarily held by households in Southeastern Europe, which – unlike households in Central Europe – use euro cash as a store of value and partially as a means of payment in addition to their respective local currency. Policies introduced in CESEE countries to stabilize economies after the outbreak of the financial and economic crisis in 2008 have ultimately increased the public’s confidence in the security of its savings deposits. The recent drop in euro cash holdings can therefore be attributed not only to the depletion of euro cash reserves during the crisis to finance necessary expenditures. It also seems to reflect a medium-term tendency to shift portfolios from (euro) cash to (euro) deposits. Classification-JEL: D14, E41, G11, G20, O16, N14 Keywords: dollarization, euroization, currency substitution, household finance, transition crisis, survey data Pages: 41–55 Year: 2012 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:355f662f-59e1-4f72-843c-0aff6144471b/mop_2012_q1_in_focus3_tcm16-246787.pdf File-Format: application/pdf File-Size: 2334 kb Handle: RePEc:onb:oenbmp:y:2012:i:1:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Manfred Fluch Author-Name-First: Manfred Author-Name-Last: Fluch Author-Email: manfred.fluch@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Communications, Planning and Human Resources Department Author-Name: Sabine Schlögl Author-Name-First: Sabine Author-Name-Last: Schlögl Author-Email: sabine.schloegl@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Communications Division Title: The Euro – Public Opinion in the Ten Years after the Euro Changeover Abstract: Public sentiment indicators available for the period from 2002 through 2011 provide a clear profile of public opinion on the euro for Austria and partly also for the euro area. Essentially, the period following the introduction of euro banknotes and coins falls into two distinct phases during which two opposing sentiments prevailed: During the first phase, satisfaction with, and acceptance of, the euro rose to a high level until 2009, and during the second phase, the sovereign debt crisis and its consequences caused pro-euro sentiment to decline from 2010, culminating in a critical assessment during the height of the crisis in the summer and fall of 2011. Survey ratings dropped from a high positive sentiment of Austrian respondents on the euro, nearly 80%, in 2009 to approximately 60% in fall 2011. The decline in confidence in the euro appears to have been caused by EU and national policymakers struggling with crisis management rather than by the euro itself. As the runaway public debt and financial speculation are seen as the cause of the crisis, most Austrians and euro area citizens agree with financial and economic policy measures targeted at strengthening Economic and Monetary Union (EMU) in the long run. Although the euro faces great challenges, a clear majority of Austrians (and of other euro area citizens) are convinced that the euro is here to stay. People in Austria and in the euro area reported hardly any difficulties in the day-to-day use of euro cash. Some respondents are still disposed to comparing euro with schilling or other former currencies in the euro area, above all for exceptional purchases. Those surveyed overwhelmingly agree that they have personally benefited from the euro: price transparency, easier and cheaper travel, and lower costs for payment transactions are considered undisputed advantages of the single currency. Even if euro inflation has been low in the long run, people continue to associate the introduction of the euro with a rise in prices. The share of respondents who see the euro as very stable and expect it to remain so diminished noticeably in 2011 as a consequence of higher inflation. Whereas at the end of 2007 almost 80% of those surveyed considered the euro stable, this figure had fallen to just over 40% at the end of 2011. Fears of higher inflation along with a loss in the value of savings ranked as Austrians’ biggest concerns at the turn of the year 2011/2012. Classification-JEL: E50 Keywords: confidence in the euro, euro cash, Austria, euro area Pages: 56–69 Year: 2012 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:67146926-559a-4244-8035-6ece3d541ae9/mop_2012_q1_in_focus4_tcm16-246790.pdf File-Format: application/pdf File-Size: 1841 kb Handle: RePEc:onb:oenbmp:y:2012:i:1:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Lenka Krsnakova Author-Name-First: Lenka Author-Name-Last: Krsnakova Author-Email: lenka.krsnakova@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Financial Statements and Treasury Risk Monitoring Division Author-Name: Maria Oberleithner Author-Name-First: Maria Author-Name-Last: Oberleithner Author-Email: maria.oberleithner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Financial Statements and Treasury Risk Monitoring Division Title: How Euro Banknotes in Circulation Affect Intra-Eurosystem Balances Abstract: The cash changeover to the euro created the need to present banknotes in circulation in an innovative manner to allocate them adequately across the balance sheets of the Eurosystem central banks. The solution adopted was to undertake regular accounting adjustments of the circulating banknotes. This article presents the relationships between the relevant balance sheet items – primarily intra-Eurosystem balances arising from such adjustment and the liability constituted by banknotes in circulation – and provides insights into the origins of this mechanism and its legal basis. The value of euro banknotes in circulation, as now reported by 18 Eurosystem central banks (i.e. including the ECB), has risen consistently over the last ten years and now stands at around EUR 900 billion. Classification-JEL: M41 Keywords: banknotes in circulation, adjustment of banknotes in circulation, intra-Eurosystem balances, capital key Pages: 70–80 Year: 2012 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:4984e786-7bd3-4454-8cf7-896603ea3431/mop_2012_q1_in_focus5_tcm16-246791.pdf File-Format: application/pdf File-Size: 1465 kb Handle: RePEc:onb:oenbmp:y:2012:i:1:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Martin Handig Author-Name-First: Martin Author-Name-Last: Handig Author-Email: martin.handig@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Financial Statements and Treasury Risk Monitoring Division Author-Name: Robert Holzfeind Author-Name-First: Robert Author-Name-Last: Holzfeind Author-Email: robert.holzfeind@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Clemens Jobst Author-Name-First: Clemens Author-Name-Last: Jobst Author-Email: clemens.jobst@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Understanding TARGET 2: The Eurosystem’s Euro Payment System from an Economic and Balance Sheet Perspective Abstract: TARGET2 – the Trans-European Automated Real-time Gross settlement Express Transfer System 2 operated by the Eurosystem – provides for the efficient settlement of cross-border payments in euro and is thus a key infrastructure component of European monetary union. TARGET2 claims and liabilities in the accounts of the euro area central banks have recently become a subject of public debate. However, TARGET2 balances by definition constitute intra- Eurosystem balances and are as such an integral part of the decentralized implementation of the single monetary policy. Considerable claims and liabilities can arise for various reasons, many of which are related to the normal functioning of the euro area and do not require an economic policy response. Changes in TARGET2 balances also do not imply any direct changes in the risk exposure levels of national central banks. At the same time, there is no denying that the Eurosystem is facing major challenges in its monetary and liquidity policy. TARGET2 balances are indeed currently high owing to the financial crisis, given the need to provide liquidity aid to the European banking system. Yet as soon as such liquidity aid is no longer necessary, following appropriate economic policy measures such as recapitalizing banks or measures to restore confidence in government solvency, TARGET2 balances will also decline. Classification-JEL: E58, F32, F33 Keywords: TARGET2, banknotes, central bank balance sheet, ECB, Eurosystem Pages: 81–91 Year: 2012 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:9a0a2188-e51a-41f5-b808-3c763e4cdad0/mop_2012_q1_in_focus6_tcm16-246792.pdf File-Format: application/pdf File-Size: 1776 kb Handle: RePEc:onb:oenbmp:y:2012:i:1:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Fabio Rumler Author-Name-First: Fabio Author-Name-Last: Rumler Author-Email: fabio.rumler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Title: The Pass-Through of Commodity Prices to Consumer Prices of Selected Products Abstract: This contribution analyzes the pass-through of various commodity prices to consumer prices of selected products in Austria. For this purpose, consumer price microdata for the period from 1996 to 2009 are mapped to the underlying disaggregated commodity prices. The duration and extent of the pass-through are found to vary considerably across products. While changes in crude oil prices turned out to have a quite substantial and quick effect on the consumer prices of super gasoline and diesel, the pass-through was rather weak for bread (bread rolls) and meat (beef steak). Of all products analyzed here, natural gas had the slowest price response, as its retail price is still partly government-controlled in Austria. Since the introduction of euro banknotes and coins in January 2002, the pass-through has increased significantly for most products under review, but we cannot infer a clear casual relationship from this result as other factors might also be responsible for the observed increase in the pass-through. In addition, the pass-through to retail prices is found to be stronger for cost hikes than for cost cuts for fuel and meat products (notably beef steak). This confirms the result of an asymmetric pass-through for fuel products found in earlier studies. Classification-JEL: E11, C33 Keywords: pass-through, micro prices, commodity prices, consumer prices Pages: 92–104 Year: 2012 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:19a2b3e2-a382-416c-8a4a-67f6f9594a9a/mop_2012_q1_in_focus7_tcm16-246793.pdf File-Format: application/pdf File-Size: 1253 kb Handle: RePEc:onb:oenbmp:y:2012:i:1:b:7 Template-Type: ReDIF-Article 1.0 Author-Name: Friedrich Fritzer Author-Name-First: Friedrich Author-Name-Last: Fritzer Author-Email: friedrich.fritzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7417 Title: Price Level Convergence Before and After the Advent of EMU Abstract: This article explores the convergence in consumer prices for groups of countries within the European Economic and Monetary Union (EMU) and for selected non-EU countries, using detailed product-level data for 35 goods and services. It also analyzes the price gap between Austria and its major trading partners Germany and Italy. Within the euro area (the 11 founder members), price level convergence has been found to have occurred primarily in the run-up to the launch of euro banknotes and coins. Only in the case of consumer goods, such as personal transport equipment, clothing and footwear, and audio-visual, photographic and information processing equipment, did price levels continue to converge across the euro area countries also after the cash changeover. Compared with the other groups of countries reviewed here, food and services price levels converged to a much lesser extent or not at all in the euro area. However, during the whole period considered the variation in consumer prices was lowest in the euro area. Price level comparisons carried out between Austria and Germany/Italy revealed convergence in the case of both consumer goods and services, except for food prices. The latter is likely to have been due primarily to structural changes in retail trade: while in many sectors the trend decline in labor costs and profit margins and moderate deregulation may have contributed to price convergence between Austria and its trading partners, the Austrian food sector has displayed a trend toward rising labor costs. Another driver of food price differences is the VAT applied to food products, which is higher in Austria than in Germany or Italy. Classification-JEL: E31, F15 Keywords: economic integration, prices, euro Pages: 105–116 Year: 2012 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:aa799b3f-e2d1-4d60-b571-e25dc0143b8b/mop_2012_q1_in_focus8_tcm16-246794.pdf File-Format: application/pdf File-Size: 1909 kb Handle: RePEc:onb:oenbmp:y:2012:i:1:b:8 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Crisis of Confidence to Trigger Marked Slump in Growth in 2012 Pages: 5–29 Year: 2011 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:2796ae20-683b-45ac-9ef8-0d993c991468/mop_2011_q4_prognose_tcm16-245365.pdf File-Format: application/pdf File-Size: 1586 kb Handle: RePEc:onb:oenbmp:y:2011:i:4:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Sylvia Gloggnitzer Author-Name-First: Sylvia Author-Name-Last: Gloggnitzer Author-Email: sylvia.gloggnitzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, European Affairs and International Financial Organizations Division Author-Name: Isabella Lindner Author-Name-First: Isabella Author-Name-Last: Lindner Author-Email: isabella.lindner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, European Affairs and International Financial Organizations Division Title: Economic Governance Reform and Financial Stabilization in the EU and in the Eurosystem – Treaty-Based and Intergovernmental Decisions Abstract: The institutional framework and the tools for economic governance provided by the Treaty of Lisbon were inadequate for preventing or resolving the recent banking and sovereign debt crisis in the EU. For instance, the Treaty did not provide any instruments for stabilizing euro area finances, and the existing economic governance instruments, such as the Stability and Growth Pact or the Broad Economic Policy Guidelines, were not applied adequately by the Member States. In addition, the institutional decision-making procedures foreseen by the Treaty proved too sluggish during the crisis. Therefore, most of the measures taken to remedy the situation were agreed through intergovernmental decision-making, with the European Council evolving as the key player in the governance process, rather than through standard EU procedures (with the “Community Method”). The deepening of euro governance, alongside the EU governance framework, resulted from the fact that the euro area required a coherent and efficient economic governance structure. The willingness to offer financial solidarity within the euro area correlates with the willingness of distressed Member States to implement sustainable national fiscal policies. To ensure the long-term success of the euro, the euro area will, however, have to adopt a common overall strategy that adds more value to its economic success as an entity. Classification-JEL: G01, N14, O52 Keywords: EU economic governance reform, financial stabilisation, Treaty of Lisbon, intergovernmental decision Pages: 36–58 Year: 2011 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:a8509d05-a9a1-4d89-91e9-1eae663c2b17/mop_2011_q4_in_focus2_tcm16-245357.pdf File-Format: application/pdf File-Size: 1309 kb Handle: RePEc:onb:oenbmp:y:2011:i:4:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Walpurga Köhler-Töglhofer Author-Name-First: Walpurga Author-Name-Last: Köhler-Töglhofer Author-Email: walpurga.koehler-toeglhofer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Macro Coordination under the European Semester Abstract: To reinforce ex ante coordination of EU Member States’ economic and fiscal policies, a new monitoring cycle has been introduced: the “European semester” – a six-month period every year during which national budgetary and structural policies will be reviewed to detect any inconsistences and emerging imbalances while major budgetary decisions are still under preparation. Technically, the European semester brings together various procedures for economic policy coordination, based primarily on Article 121 (and to lesser degrees on Articles 126, 136 and 148) of the Treaty on the Functioning of the European Union. Specifically, the reform reinforces the preventive arm of the Stability and Growth Pact, introduces a new procedure for addressing macroeconomic imbalances, and places greater emphasis on monitoring the national fiscal frameworks, identifying macrostructural growth bottlenecks and detecting macrofinancial risks in the Member States. National fiscal and economic policies will be monitored in a coordinated and integrated manner rather than separately, and national policies will be aligned with integrated guidelines. The new approach is also intended to facilitate joint discussion of important economic policy priorities at EU level, thereby ensuring complementarity of national economic policy plans through policy guidance before Member States finalize their budgets for the following year. The results of such discussions and the definition of economic and fiscal policy priorities will then be effectively reflected in national policymaking, particularly in national budgets and structural reforms. The European semester thus follows an integrative approach that moves toward comprehensive, country-specific economic surveillance, in some cases with the possibility of imposing corresponding sanctions, which is in marked contrast to the “open method of coordination” used under the Lisbon agenda. Upon implementation of the “six-pack” of economic governance rules in January 2012, the already stringent monitoring requirements will be tightened even further. Classification-JEL: E6 H6, F5, H1 Keywords: European semester, EU economic governance reform, macro coordination Pages: 59–73 Year: 2011 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:d0ac3ba4-c8ae-4db8-b314-2031a1abba1c/mop_2011_q4_in_focus3_tcm16-245358.pdf File-Format: application/pdf File-Size: 1107 kb Handle: RePEc:onb:oenbmp:y:2011:i:4:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Maria Auböck Author-Name-First: Maria Author-Name-Last: Auböck Author-Email: maria.auboeck@bka.gv.at Author-Workplace-Name: Austrian Federal Chancellery Author-Name: Christina Burger Author-Name-First: Christina Author-Name-Last: Burger Author-Email: christina.burger@bmwfj.gv.at Author-Workplace-Name: Austrian Federal Ministry of Economy, Family and Youth Author-Name: Elmar Mangler Author-Name-First: Elmar Author-Name-Last: Mangler Author-Email: elmar.mangler@bmf.gv.at Author-Workplace-Name: Austrian Federal Ministry of Finance Title: Europe 2020 – A New Framework for New Growth Abstract: The Europe 2020 strategy, as adopted by the European Council on June 17, 2010, provides the new framework for the EU’s growth and employment policy. Under the new strategy, measures and reforms should be geared toward smart, sustainable and inclusive growth. The design of the new strategy was influenced heavily by the weaknesses of the Lisbon agenda (the predecessor to Europe 2020) and the compounded economic policy challenges arising from the crisis: The definition of quantitative targets at an early stage and transparent monitoring mechanisms will facilitate surveillance of implementation. For the first time, country- specific growth bottlenecks have been identified, in cooperation with the Member States, and these bottlenecks must be addressed with suitable measures. The strategy’s focus on enhancing employment, the knowledge base, competitiveness, energy efficiency and social inclusion have concentrated efforts on the most important supply-side growth factors. The EU’s new economic governance is designed to ensure the efficient coordination of national policies. All of these aspects will have a decisive impact on Austrian economic policy in the coming years. Classification-JEL: O52, E61, E65 Keywords: Europe 2020, Lisbon strategy, European semester, structural reforms, financial crises Pages: 74–84 Year: 2011 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:78e4aa38-663e-4781-b6fb-fc84a5ed4985/mop_2011_q4_in_focus4_tcm16-245360.pdf File-Format: application/pdf File-Size: 1018 kb Handle: RePEc:onb:oenbmp:y:2011:i:4:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Johannes Holler Author-Name-First: Johannes Author-Name-Last: Holler Author-Email: johannes.holler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Lukas Reiss Author-Name-First: Lukas Author-Name-Last: Reiss Author-Email: lukas.reiss@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: What to Expect from the Latest Reform of the Stability and Growth Pact Abstract: Before the crisis hit, many euro area countries had failed to create sufficient fiscal room for times of economic difficulty, which made a new reform of the Stability and Growth Pact inevitable. Above all, this most recent reform introduces an expenditure rule in the preventive arm of the pact, operationalizes the debt criterion in the dissuasive arm and imposes stricter sanctions in case of noncompliance. The reform strengthens the preventive arm by making it easier to measure compliance and launch procedures as well as by introducing symbolic sanctions. While the introduction of the debt rule certainly tightened the conditions of the dissuasive arm for highly indebted countries, it remains to be seen by how much, given the large number of exceptions. Notwithstanding the new voting procedure (which is designed to make it more likely that sanctions are in fact applied), we doubt that economically significant penalties will be imposed in the foreseeable future. Classification-JEL: E61, E62, H60 Keywords: Stability and Growth Pact, fiscal rules, fiscal policy Pages: 85–98 Year: 2011 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:4124b9c8-0b8e-4c24-adae-247f8c76adda/mop_2011_q4_in_focus5_tcm16-245361.pdf File-Format: application/pdf File-Size: 1324 kb Handle: RePEc:onb:oenbmp:y:2011:i:4:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Sebastian Essl Author-Name-First: Sebastian Author-Name-Last: Essl Author-Email: sebastian.essl@bmf.gv.at Author-Workplace-Name: Austrian Federal Ministry of Finance Author-Name: Alfred Stiglbauer Author-Name-First: Alfred Author-Name-Last: Stiglbauer Author-Email: alfred.stiglbauer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7435 Title: Prevention and Correction of Macroeconomic Imbalances: the Excessive Imbalances Procedure Abstract: Macroeconomic imbalances can lead to economic crises. This is especially true in a monetary union due to the restrictions it imposes on the tools available to economic policymakers. The years leading up to the outbreak of the global economic crisis were characterized by divergent macroeconomic developments within the euro area, which meant that the impact of the crisis varied from Member State to Member State and that, subsequently, unexpected challenges have arisen for the single monetary policy and coordinated fiscal and economic policy. In order to prevent such developments in future, a procedure for preventing and correcting macroeconomic imbalances, analogous to the Stability and Growth Pact, was created within the framework of the European semester. The preventive arm of the procedure is designed to detect and analyze potential macroeconomic problems. If the procedure flags up “excessive” imbalances for a Member State, the corrective arm will come into effect, under which the relevant Member States will be required to submit plans for corrective measures. If Member States then fail to comply with the recommended corrective actions, sanctions may be imposed. The new procedure constitutes a considerable boost to economic policy coordination within the EU and the euro area. Nonetheless, it has yet to prove itself in practice. Classification-JEL: E62, F32, F55 Keywords: macroeconomic imbalances, competitiveness, fiscal policy, structural policy, European Union, euro area Pages: 99–113 Year: 2011 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:c6c12df9-7934-4e79-a192-09fb9413351d/mop_2011_q4_in_focus6_tcm16-245362.pdf File-Format: application/pdf File-Size: 1307 kb Handle: RePEc:onb:oenbmp:y:2011:i:4:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Franz Nauschnigg Author-Name-First: Franz Author-Name-Last: Nauschnigg Author-Email: franz.nauschnigg@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, European Affairs and International Financial Organizations Division Author-Name: Paul Schieder Author-Name-First: Paul Author-Name-Last: Schieder Author-Email: paul.schieder@bmf.gv.at Author-Workplace-Name: Austrian Federal Ministry of Finance, General Economic Policy Division Title: Crisis Financing in the EU Abstract: The European financial architecture in an environment of liberalized capital markets, and the European monetary union with the euro and an effective Eurosystem on the one hand and a less developed economic union on the other hand have needed to undergo reform to build resilience to crisis. As the Stability and Growth Pact (SGP) had failed to adequately ensure the budgetary surveillance required under the EU treaties, it was revised and reinforced again in 2010 and 2011, and in addition supplemented by a new procedure designed to prevent macroeconomic imbalances. Moreover, a number of “financial assistance facilities” were created or expanded for EU or euro area countries to support them in managing crises that might result in contagion effects. The emerging difficulties of Greece created a need to ensure previously nonexistent crisis financing for euro area countries. In March 2009, the funding capacity of the EU’s balance of payments facility was raised to EUR 50 billion. Measures taken since May 2010 include the extension of bilateral loans to Greece and the creation of further financing mechanisms: the European Financial Stability Facility (EFSF: EUR 440 billion), the European Financial Stabilisation Mechanism (EFSM: EUR 60 billion) and the European Stability Mechanism (ESM: EUR 500 billion). With these mechanisms, the EU has built a framework for providing regional financial support alongside funding provided by the IMF at the global level. Classification-JEL: G11, H12 Keywords: EU, financial crisis, crisis financing Pages: 114–124 Year: 2011 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:b8d62885-9461-4f0d-8b02-ea61f57cf0d1/mop_2011_q4_in_focus7_tcm16-245363.pdf File-Format: application/pdf File-Size: 1016 kb Handle: RePEc:onb:oenbmp:y:2011:i:4:b:7 Template-Type: ReDIF-Article 1.0 Author-Name: Michaela Hajek-Rezaei Author-Name-First: Michaela Author-Name-Last: Hajek-Rezaei Author-Email: michaela.hajek-rezaei@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, European Affairs and International Financial Organizations Division Title: Chronology of European Initiatives in Response to the Crisis Pages: 125–134 Year: 2011 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:9daa227e-126d-426e-bb4f-43b9923fd2bc/mop_2011_q4_in_focus8_tcm16-245364.pdf File-Format: application/pdf File-Size: 1362 kb Handle: RePEc:onb:oenbmp:y:2011:i:4:b:8 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Josef Schreiner Author-Name-First: Josef Author-Name-Last: Schreiner Author-Email: josef.schreiner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Maria Antoinette Silgoner Author-Name-First: Maria Antoinette Author-Name-Last: Silgoner Author-Email: Maria.Silgoner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Growth Weakens Worldwide Abstract: Substantial data revisions have shown that the U.S. recession in 2008 to 2009 was far more pronounced than originally estimated, and that the recovery has been slower than previously assumed. Leading indicators signal that growth will stay weak in the second half of 2011. With key interest rates already at a low level, monetary policymakers have resorted to new nonstandard measures to support the economy. Japan’s economy has largely recovered from the severe consequences of the earthquake in March 2011. The reconstruction activities have given Japan’s economy a boost, and global production chains have been largely reestablished. Japan’s economic growth is likely to enter positive territory again already in the second half of 2011. For 2011 as a whole, the IMF sees Japanese GDP declining by 0.5%. Additionally, the strong appreciation of the Japanese yen may affect export growth. While China’s economic growth has lost some steam, it will still come to some 9% in 2012. Euro area growth slackened noticeably in the course of the first half of 2011. In the second quarter, real GDP edged up by only 0.2% on the previous quarter. Consumer spending diminished, and exports became the mainstay of growth. Euro area economic growth is anticipated to stay slow in the third quarter. Conditions in the labor market have been improving only hesitantly. The continued tension in the government bond market is creating uncertainty. Whereas Ireland’s efforts to consolidate its government finances have resulted in a decline in yield spreads, the yields on Greek sovereign bonds rose to new heights in September 2011 following reports that the results of Greece’s consolidation efforts have been insufficient. In recent months uncertainties about the economic prospects in EU Member States in Central, Eastern and Southeastern Europe (CESEE) heightened significantly. The slowdown in growth in the second quarter of 2011 and the publication of adverse economic data for both Europe as a whole and the world economy lead to activity forecasts for the region having been revised downwards since early summer 2011. Price pressures, which were comparatively high in the first six months of 2011, passed their peak in the summer. In various countries the external position has gradually deteriorated of late. Thus the crisis-induced cyclical component of current account adjustment is slowly losing significance. The Austrian economy continued to expand at a fairly robust pace in the first half of 2011 and, even at 0.7% growth in the second quarter, significantly outperformed Germany and the euro area as a whole. Meanwhile, however, there have been increasing signs of a sudden and substantive loss of economic momentum from mid-2011 onward. The weaker external environment and a high level of uncertainty in the corporate sector against the backdrop of the sovereign debt crisis have caused export and investment, previously the key growth drivers, to cool off visibly. For 2011 as a whole, GDP growth is still expected to average close to 3% given the strong start into the year. The outlook for growth in 2012, however, is rather weak, with the latest GDP growth projections, released in September 2011, lying within a range of 0.8% (Austrian Institute of Economic Research – WIFO) to 1.3% (Institute of Advanced Studies – IHS). Classification-JEL: E2, E3, O1 Keywords: global outlook, euro area, Central, Eastern and Southeastern Europe, Austria Pages: 6–21 Year: 2011 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:c7632a32-2935-4b00-98bc-4e1132748ee4/mop_2011_q3_analyses01_fenz_tcm16-241426.pdf File-Format: application/pdf File-Size: 832 kb Handle: RePEc:onb:oenbmp:y:2011:i:3:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Beer Author-Name-First: Christian Author-Name-Last: Beer Author-Email: chbeer@wu-wien.ac.at Author-Workplace-Name: Vienna University of Economics and Business Administration Title: Literature Review on the Economic Effects of the Euro on Austria Abstract: The possible impact of the euro on Austria has been widely discussed, as will be shown in this literature review, which focuses above all on the impact of the euro on inflation, foreign trade and economic growth. Not surprisingly, it has been quite difficult to quantify the (specific) impact of the euro, so that the academic literature contains only few hard-and-fast statements about the currency’s impact on Austria. According to the findings of the literature, the purely economic impacts of the single currency appear not to have been very large – other European integration projects that partly relate to monetary union appear to have had a stronger influence on Austria’s economy. Classification-JEL: E31, E42, F40 Keywords: Economic and Monetary Union, inflation, international trade Pages: 22–34 Year: 2011 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:ef54e9c0-a969-4fff-8d4e-8735f4360499/mop_2011_q3_analyses02_beer_tcm16-241427.pdf File-Format: application/pdf File-Size: 936 kb Handle: RePEc:onb:oenbmp:y:2011:i:3:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Beate Resch Author-Name-First: Beate Author-Name-Last: Resch Author-Email: beate.resch@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Klaus Vondra Author-Name-First: Klaus Author-Name-Last: Vondra Author-Email: klaus.vondra@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Austria’s Manufacturing Competitiveness Abstract: This study discusses Austria’s manufacturing competitiveness and its influence on changes in the export market shares of domestic manufacturers. We first analyze price competitiveness over time and then conduct a constant-market-shares analysis in order to attribute changes in the export market shares of domestic manufacturers to their competitiveness on the one hand and international demand patterns on the other. Austria’s manufacturing industry seized the opportunity to expand to the east when the markets in Central, Eastern and Southeastern Europe (CESEE) opened up. Against this backdrop, domestic manufacturers were able to improve their price competitiveness between 1995 and 2004. They also gained export market shares from 2000 onward but lost some ground in 2005 and 2006. Since then, market shares and price competitiveness have remained broadly unchanged, which means that Austria has in fact done better than most other euro area countries. By historical comparison, the impact of the financial and economic crisis on Austrian manufacturers’ export market shares and their competitiveness remained limited. Classification-JEL: F14, L6 Keywords: international competitiveness, Austrian manufacturing, CMSA Pages: 35–61 Year: 2011 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:09fb2266-eacd-47b5-a54e-17fa7aa6056b/mop_2011_q3_analyses03_ragacs_tcm16-241428.pdf File-Format: application/pdf File-Size: 1365 kb Handle: RePEc:onb:oenbmp:y:2011:i:3:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Wolfgang Pointner Author-Name-First: Wolfgang Author-Name-Last: Pointner Author-Email: wolfgang.pointner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Katharina Wolner-Rößlhuber Author-Name-First: Katharina Author-Name-Last: Wolner-Rößlhuber Author-Email: katharina.wolner-roesslhuber@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: European Financial Supervision: The Long Road to Reform Abstract: The financial crisis has shown the inadequacy of financial market regulation and supervision in the EU. As the integration of Europe’s financial market progressed, market participants continued to be supervised nationally and the scope of regulation remained mainly limited to microprudential aspects. Leading experts therefore called for financial supervision to be integrated at EU level and for regulators to place a greater emphasis on systemic risk. Following lengthy negotiations, the Council of the European Union and the European Parliament have since approved a reform based on proposals made by the European Commission. The legislative process for implementing the reform – in fact a good example of how legislative decisionmaking procedures work under the provisions of the Lisbon Treaty – highlighted the political interests of the parties involved and the differences between them. The new supervisory architecture that came into force on January 1, 2011, was designed to sustain financial stability. Classification-JEL: E44, F36, G28 Keywords: financial regulation, bank supervision, European decision making Pages: 62–81 Year: 2011 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:1b304165-b93f-4d5f-9e98-d3793ad45f05/mop_2011_q3_analyses04_pointner_tcm16-241446.pdf File-Format: application/pdf File-Size: 492 kb Handle: RePEc:onb:oenbmp:y:2011:i:3:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Klaus Vondra Author-Name-First: Klaus Author-Name-Last: Vondra Author-Email: klaus.vondra@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Austria’s Economy Moves beyond the Crisis: Powerful Economic Growth Provides a Tailwind to Reduce Budget Deficits – Economic Outlook for Austria from 2011 to 2013 (June 2011) Classification-JEL: C5, E17 Keywords: forecast, Austria Pages: 6–30 Year: 2011 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:825d9610-1bc1-4e11-8928-1a5e700b4c04/mop_2011_q2_analyse01_ragacs_tcm16-235934.pdf File-Format: application/pdf File-Size: 1955 kb Handle: RePEc:onb:oenbmp:y:2011:i:2:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Friedrich Fritzer Author-Name-First: Friedrich Author-Name-Last: Fritzer Author-Email: friedrich.fritzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7417 Title: Inflation Differentials between Austria, the Euro Area, Germany and Italy Abstract: In Austria, inflation as measured by the HICP has been accelerating at a faster rate than in other euro area countries since late 2010. By May 2011, Austria had built up an inflation differential of 1.3 percentage points against Germany and of 0.7 percentage points against Italy. A more detailed analysis shows inflation developments in Austria to have diverged from euro area patterns above all in the food sector. This can partly be explained with the increase of the tax rate on tobacco products in Austria at the beginning of 2011. In addition, domestic food retailing market structures may have contributed to the faster and stronger pass-through of global cost shocks to consumer prices in Austria compared with other euro area countries. This study argues that retail price competition may be the key driver behind the faster and stronger pass-through. This finding would, however, have to be substantiated by a comprehensive analysis of price setting dynamics and of market structures in food retailing to be conclusive. The energy sector is another industry in which Austria recorded more rapid inflation growth than other euro area countries in early 2011, the reason being the petroleum tax increase that was implemented in 2011. The oligopolistic structure of the domestic motor fuel market calls for continued close monitoring. Service inflation accelerated to 3.3% in May 2011, significantly exceeding above all the corresponding German rate. This divergence may be attributed at least in part to country-specific effects, including the reduction of the VAT rate on accommodation services in Germany from 19% to 7% and the abolition of university tuition fees in one of Germany’s federal states in 2010. Industrial goods excluding energy also contributed to the disproportionately strong acceleration of domestic inflation in early 2011 (May: 1.9%). Above all shoe and garment prices rose comparatively faster in Austria than in Germany. Given the seasonality of price movements that is typical of nonenergy industrial goods and given the uncertainty surrounding inflation measures following the implementation of harmonized EU standards for the treatment of seasonal products in the HICP in January 2011, it is, however, too early to deduct an inflation trend in this sector at this stage. At the aggregate level, the Austrian inflation rate and its differential against other countries’ rates are expected to shrink considerably in the coming months and in 2012. According to the OeNB’s latest projections, annual Austrian HICP inflation should drop substantially from 3.2% in 2011 to 2.1% in 2012. At the same time, Austria’s inflation differential to the euro area should narrow by 0.2 to 0.5 percentage points against the euro area and by 0.1 to 0.3 percentage points against Germany and Italy. Classification-JEL: E31 Keywords: sectoral inflation, inflation differentials Pages: 31–42 Year: 2011 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:94ec58de-687f-4793-81e9-d44cec2381d7/mop_2011_q2_analyse02_fritzer_tcm16-235935.pdf File-Format: application/pdf File-Size: 2360 kb Handle: RePEc:onb:oenbmp:y:2011:i:2:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Ernest Gnan Author-Name-First: Ernest Author-Name-Last: Gnan Author-Email: ernest.gnan@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7400 Author-Name: Johannes Langthaler Author-Name-First: Johannes Author-Name-Last: Langthaler Author-Email: johannes.langthaler@statistik.gv.at Author-Workplace-Name: Statistics Austria Author-Name: Maria Teresa Valderrama Author-Name-First: Maria Teresa Author-Name-Last: Valderrama Author-Email: maria.valderrama@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Title: Heterogeneity in Euro Area Consumers’ Inflation Expectations: Some Stylized Facts and Implications Abstract: Aggregate measures of inflation expectations mask heterogeneity among consumers. According to the theoretical and empirical literature, expectations may differ due to different information sets and “models” used by individuals. European Commission Consumer Survey data confirm considerable heterogeneity in inflation expectations over time, across countries and across demographic groups. Consistent with findings according to which financial literacy is an important determinant of inflation expectations heterogeneity, our econometric estimates show that education and income seem to play a more important role than age and gender. However, their effect on heterogeneity is nonlinear. We also find evidence of strong country-specific idiosyncrasies in the formation of inflation expectations. Overall, while showing some common tendencies, inflation expectations in the euro area continue to vary across countries and demographic groups as regards their level, driving factors and evolution over time. Employing “targeted” or “multi-tiered” communication strategies for different demographic groups and within the various euro area countries might indeed help “focus,” or “anchor,” inflation expectations around a level in line with the Eurosystem’s definition of price stability. Classification-JEL: E31, E52, D83 Keywords: inflation expectations, heterogeneity, communication policies Pages: 43–66 Year: 2011 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:39710ad5-c09d-41d5-a7e6-9f4455ecbe6e/mop_2011_q2_analyse03_gnan_tcm16-235936.pdf File-Format: application/pdf File-Size: 2755 kb Handle: RePEc:onb:oenbmp:y:2011:i:2:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Andrés Fuentes Author-Name-First: Andrés Author-Name-Last: Fuentes Author-Email: andres.fuentes@oecd.org Author-Workplace-Name: OECD Author-Name: Paul Ramskogler Author-Name-First: Paul Author-Name-Last: Ramskogler Author-Email: paul.ramskogler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Foreign Research Division Author-Name: Maria Antoinette Silgoner Author-Name-First: Maria Antoinette Author-Name-Last: Silgoner Author-Email: Maria.Silgoner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: The Swiss Economy’s Resilience to Crisis and Its Lessons for Austria Abstract: Switzerland and Austria, two small, open economies, have emerged fairly unscathed from the financial and economic crisis. Switzerland, above all, is notable for its relative stability. Domestic demand proved to be rather resilient, and in Switzerland, foreign trade performance also contributed to stability. At the same time, the important internationally oriented financial sector of both countries, a growth engine during good times, came to represent a risk factor during the crisis. The key factors in explaining Switzerland’s resilience to the crisis are the country’s high degree of economic diversification and its specialization on/in products that are fairly robust to cyclical fluctuations. Like in Austria, a stable labor market and the absence of a real estate bubble preceding the crisis supported the economy. The stability of credit supply and the ultimately small impact of the financial crisis thanks to swift and decisive government action played an important role as well. Economic policymakers also made an important contribution to stability by reducing key interest rates, adopting economic stimulus packages, taking measures to stabilize the labor market and, above all, launching bank rescue packages to safeguard financial stability. Preventing financial crises will be a great challenge for both countries in the coming years. In Switzerland, the too-big-to-fail aspect represents a major issue, considering that the total assets of the two biggest Swiss banks – UBS and Credit Suisse – each are a multiple of Swiss GDP. Classification-JEL: E50, E60, O11 Keywords: Austria, Switzerland, financial market, financial and economic crisis Pages: 67–86 Year: 2011 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:e24b354f-f225-4758-828c-c6d2e6bfc6ac/mop_2011_q2_analyse04_fuentes_tcm16-235937.pdf File-Format: application/pdf File-Size: 2400 kb Handle: RePEc:onb:oenbmp:y:2011:i:2:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Aleksandra Riedl Author-Name-First: Aleksandra Author-Name-Last: Riedl Author-Email: aleksandra.riedl@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Foreign Research Division Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Author-Name: Josef Schreiner Author-Name-First: Josef Author-Name-Last: Schreiner Author-Email: josef.schreiner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Global Economy Continues to Recover in a Fragile Environment Abstract: U.S. economic growth has been gaining momentum, with the annualized growth rate of real GDP reaching 3.1% in the fourth quarter of 2010. Factoring in this good performance, the IMF has revised upward its economic outlook for 2011 by 0.7 percentage points to 3.0%. At the same time, the labor market has been slow to improve, and housing markets are still adjusting; hence the contribution of labor and housing to economic growth has been rather moderate. Furthermore, the devastating earthquake in Japan hit the economy at a time when the recovery of economic activity was still fragile. Judging from previous experience with earthquakes, international organizations expect the setback in Japanese growth to be temporary, however. The growth effect might swing back into positive territory as reconstruction efforts accelerate in the second half of 2011. Given the limited openness of the Japanese economy, the repercussions on the world economy are likely to remain subdued. The Bank of Japan (BoJ) moved to support the economy by providing ample liquidity and expanding its purchases of securities from the private sector. The G-7 economies joined forces to intervene against the strong appreciation of the Japanese yen in the days following the earthquake. The year 2010 saw China emerge as the second-largest economy worldwide behind the United States, measured at current GDP prices. The IMF expects the Chinese economy to grow by 9.6% in 2011. The Chinese central bank responded by raising minimum reserve requirements a few times and by increasing its key monetary policy rates three times to keep the economy from overshooting. The renminbi has appreciated by close to 4% since China returned to a more flexible exchange rate arrangement in 2010. Euro area real GDP grew by just 0.3% quarterly in the fourth quarter of 2010. Euro areawide unemployment reached 9.9% in January 2011, just 0.2 percentage points short of the 12-year peak recorded in October 2010. ECB staff projections for GDP growth in 2011 are within a range of 1.3% and 2.1%. Reflecting commodity price increases, the annual growth rate of HICP inflation has been trending upward since mid-2010, standing at 2.4% in February 2011. While the economic recovery implied a reversal of public debt dynamics in most euro area countries, the high debt levels of some euro area countries continued to cause turbulence. Exacerbated by the downgrading of ratings for Greece Portugal and Spain, the spreads payable on sovereign bonds issued by peripheral European countries remained elevated. In the spirit of European solidarity, a permanent crisis mechanism – the European Stability Mechanism – has been established in the euro area, which will become operational in mid-2013. The gradual economic recovery in Central, Eastern and Southeastern European (CESEE) EU Member States continued in the second half of 2010. The business cycles of the countries in the area reconverged somewhat, and domestic demand gained momentum as a driver of growth. These developments were underpinned by a stabilization of current account balances, following a significant recovery of those positions during the recent years of subdued economic growth. Rising food prices and tax increases in a number of countries stoked inflation in recent months, prompting a number of central banks to raise their key monetary policy rates, thereby initiating a reversal from the broadly accommodative stance adopted in the period of crisis. The Austrian economy, finally, is in very good shape notwithstanding a number of risk factors. The key engine of growth has been the manufacturing industry, which has begun to invest again given strong export growth, whereas the construction sector continues to contract. The OeNB’s short-term economic indicator results point to above-average growth in the first half of 2011. These developments will, in turn, continue to improve labor market conditions, which are already favorable. The surge in energy and commodity prices has caused inflation to rise strongly lately; the rate hit 3.1% in February 2011. Classification-JEL: E2, E3, O1 Keywords: global outlook, euro area, central, eastern and southeastern Europe, Austria Pages: 6–20 Year: 2011 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:df217a30-f44c-4817-98b7-d3d7a08e088f/mop_2011_q1_analyse01_riedl_tcm16-231594.pdf File-Format: application/pdf File-Size: 1068 kb Handle: RePEc:onb:oenbmp:y:2011:i:1:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Walpurga Köhler-Töglhofer Author-Name-First: Walpurga Author-Name-Last: Köhler-Töglhofer Author-Email: walpurga.koehler-toeglhofer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Lukas Reiss Author-Name-First: Lukas Author-Name-Last: Reiss Author-Email: lukas.reiss@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Austria’s Tax Structure in International Comparison – A Statistical and Economic Analysis Abstract: For several reasons, tax levels and structures are currently at the forefront of the economic policy debate in Austria. We aim to contribute to the scientific basis of this discussion by analyzing the specifics of the tax system in Austria. The meaningfulness of the overall tax rate as an indicator is limited, given that there are numerous options for financing market-related services and given that some economic or social policy goals can be achieved on the revenue or the expenditure side of the budget or both. The problems arising from these facts make it difficult to draw a meaningful international comparison of tax structures. The taxation of labor is above average in Austria, which can be only partly attributed to high social security contributions and the associated high government benefits for employees. Revenues from taxes on property and wealth are exceedingly low in an international comparison, reflecting above all Austria’s very low real property tax and below-average revenues from taxes on financial and property transactions. Classification-JEL: H20, E01 Keywords: tax structure, overall tax ratio, national accounts Pages: 21–40 Year: 2011 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:7893d64e-d8a5-49f8-aa2b-7e3db232cb97/mop_2011_q1_analyse02_reiss_tcm16-231595.pdf File-Format: application/pdf File-Size: 1709 kb Handle: RePEc:onb:oenbmp:y:2011:i:1:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Friedrich Fritzer Author-Name-First: Friedrich Author-Name-Last: Fritzer Author-Email: friedrich.fritzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7417 Title: Administered Prices, Inflation and the Business Cycle – Selected Aspects Abstract: The public sector plays a central role in price-setting in some markets for goods and services. Consequently, Eurostat began to publish a new series of inflation indices referred to as the HIPC-AP in early 2010 that summarizes the development of publicly administered prices. This study presents a detailed account of the concept underlying the new series and provides a cross-country analysis for the euro area. Administered prices are a key component of the HICP basket, currently accounting for 11.0% of the HICP (euro area average). This share has declined in the past decade in line with the liberalization of goods and service markets. The inflation rates of administered prices and those of flexible prices (i.e. the HICP excluding administered prices) differ with respect to both their levels and their development over time. In many euro area countries, the average HICP-AP rate of inflation has surpassed the all-items HICP inflation rate over the past ten years. In Austria, as in other euro area countries, flexible prices are found to be a leading indicator for the HICP rather than vice-versa. As public sector pricing takes place within a macroeconomic context, this study also represents a first effort to shed light on the main economic determinants of the development of the HICP-AP. The key findings are that cost-push shocks exercise a significant influence on the inflation of flexible prices, whereas their influence on administered prices is smaller or statistically not significantly different from zero. Classification-JEL: E31 Keywords: price level, inflation, deflation Pages: 41–57 Year: 2011 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:3f25c49e-c694-4587-aa5f-562b675bcca9/mop_2011_q1_analyse03_fritzer_tcm16-231600.pdf File-Format: application/pdf File-Size: 1380 kb Handle: RePEc:onb:oenbmp:y:2011:i:1:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Recovery of the Austrian Economy Continues<br/>Economic Outlook for Austria from 2010 to 2012 (December 2010) Classification-JEL: C5, E17 Keywords: forecast, Austria Pages: 6–31 Year: 2010 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:0ba70c76-37f8-42c7-9c13-84b70f257f2a/mop_2010_q4_analyses01_tcm16-221654.pdf File-Format: application/pdf File-Size: 474 kb Handle: RePEc:onb:oenbmp:y:2010:i:4:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Paul Gaggl Author-Name-First: Paul Author-Name-Last: Gaggl Author-Email: pgaggl@ucdavis.edu Author-Workplace-Name: University of California at Davis, Department of Economics Author-Name: Maria Teresa Valderrama Author-Name-First: Maria Teresa Author-Name-Last: Valderrama Author-Email: maria.valderrama@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Title: Does a Low Interest Rate Environment Affect Risk Taking in Austria? Abstract: It has recently been arg ued that a prolonged period of low interest rates under benign economic conditions tends to produce excessive risk taking in financial markets. The mechanism by which monetary policy affects investors’ risk positions has been called the “risk-taking channel” of monetary policy. We discuss this channel and compare it with the more traditional broad credit channel. Furthermore, we provide new evidence on the existence of this channel, using Austrian firm and bank data taken from the OeNB’s credit register. In particular, we show that the expected default rates within Austrian banks’ business-loan portfolios increased during the period of low refinancing rates from 2003 to 2005. This result is new and important in at least two respects: first, we construct a measure of Austrian banks’ portfolio risk on the basis of a matched lender and borrower dataset. Second, we specifically identify the effect of a monetary policy regime which is characterized by interest rates that are held at a low level for too long, as opposed to the more traditional effect of monetary policy “shocks,” usually identified through quarter-on-quarter changes in short-term interest rates. Classification-JEL: E44, E59, G21 Keywords: monetary policy, bank behavior, risk taking Pages: 32–48 Year: 2010 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:02946738-4187-4178-a41a-474a72947f50/mop_2010_q4_analyses02_tcm16-221655.pdf File-Format: application/pdf File-Size: 854 kb Handle: RePEc:onb:oenbmp:y:2010:i:4:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Fabio Rumler Author-Name-First: Fabio Author-Name-Last: Rumler Author-Email: fabio.rumler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Name: Walter Waschiczek Author-Name-First: Walter Author-Name-Last: Waschiczek Author-Email: walter.waschiczek@oenb.at. Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: The Impact of Economic Factors on Bank Profits Abstract: This study examines the impact of macroeconomic changes on bank profits that Austrian banks have experienced over the past 15 years. We used several proxies based on balance sheet data at the individual bank level, as well as macroeconomic variables to capture these changes, and additionally controlled for a number of microeconomic factors. Our estimation is based on panel regression analysis using unconsolidated micro-level data reported by all Austrian banks from 1995 to 2009. While we found that disintermediation (fewer loans in total assets) and the degree of concentration in the banking sector had a positive effect on bank profitability, changes in the ownership structure (privatization and increased foreign ownership), as well as more foreign lending by Austrian banks, did not, on the basis of unconsolidated data, have a clear-cut or significant impact on bank profits. As in other countries, bank profits in Austria are contingent on the business cycle and are positively influenced by the spread between long-term and short-term interest rates. Classification-JEL: G21, E44, D40, G32, C33 Keywords: bank profitability, banking market structure, panel econometrics, Austrian banks Pages: 49–67 Year: 2010 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:1372d37d-a783-4612-9369-aba50006da5d/mop_2010_q4_analyses03_tcm16-221663.pdf File-Format: application/pdf File-Size: 669 kb Handle: RePEc:onb:oenbmp:y:2010:i:4:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Philipp Mayer Author-Name-First: Philipp Author-Name-Last: Mayer Author-Email: philipp.mayer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Josef Schreiner Author-Name-First: Josef Author-Name-Last: Schreiner Author-Email: josef.schreiner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Global Economy Continues to Recover Abstract: The economic recovery, which had started in Asia and then quickly spread to the U.S.A., recently lost momentum in both regions. In the second quarter of 2010, the U.S. economy recorded real GDP growth (in annualized terms) of a mere 1.7% quarter on quarter, following 3.7% in the first three months of 2010 and 5.0% in the final quarter of 2009. In Japan, quarterly real GDP dropped to 0.4% in the second quarter of 2010 from 1.2% in the first quarter. Meanwhile, the global economy continues to benefit most from the momentum of the Asian threshold countries. China, which has replaced Japan as the third largest economy (after the U.S.A. and the euro area), posted 10.3% growth in the second quarter of 2010, only slightly less than in the previous quarter. In light of its vibrant import performance, China’s current account surplus is likely to be lower in 2010 than it was in 2009. In contrast to global developments, the European economy saw a growth spurt in the second quarter of 2010 thanks to unexpectedly favorable developments in Germany, which compensated for problems in the southern and western periphery of the euro area. Growth was driven above all by international trade, with the low euro exchange rate recorded in spring supporting the pickup of exports. In the second quarter of 2010, real GDP in the euro area climbed by 1.0% on the previous quarter, i.e. more strongly than expected. All euro area countries, excluding Greece, posted an expansion, with Germany being the main driver (2.2%). According to the most recent forecasts, the euro area is expected to rebound more markedly than previously envisaged. At an unchanged 10.0%, the seasonally adjusted unemployment rate for the euro area recorded in July 2010 continued to mark the highest value in twelve years. At 1.8%, the inflation rate remained moderate in September 2010. The latest forecasts do not point to any threats to price stability up until end-2011. The gradual economic recovery, which had become evident in the Central, Eastern and Southeastern European (CESEE) countries at end-2009, stabilized in the first six months of 2010, as the region, on balance, posted clearly positive quarter-on-quarter growth rates. Restocking and exports continued to buttress the economy, while consumption and investment did not foster growth in a sustainable manner. Despite a slight increase, inflation still remains at a relatively modest level. Financial markets have quieted for the time being after the turbulence of early summer 2010. In some countries, however, the situation remains highly uncertain. After an exceptionally powerful economic revival in Austria mid-2010, the OeNB expects continued robust economic activity in the second half of 2010 and a slowdown in line with world trade developments toward the end of the year. In 2010 as a whole, the Austrian economy is expected to grow by almost 2% on the back of animated export demand. Considering that the recession was very pronounced, the current upturn is fairly restrained, and domestic demand is still too weak for a self-sustained upswing. Classification-JEL: E2, E3, O1 Keywords: global outlook, euro area, central and (south-)eastern Europe, Austria Pages: 6–24 Year: 2010 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:47969a3d-dc40-4352-952e-394304d9074c/mop_2010_q3_analyses01_tcm16-212049.pdf File-Format: application/pdf File-Size: 691 kb Handle: RePEc:onb:oenbmp:y:2010:i:3:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Alfred Stiglbauer Author-Name-First: Alfred Author-Name-Last: Stiglbauer Author-Email: alfred.stiglbauer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7435 Title: The Austrian Labor Market and the Great Recession: Developments and Measures Taken Abstract: As the international financial and economic crisis unfolded, labor market conditions in Austria started to deteriorate in mid-2008, marking the onset of one of the severest crisis episodes in the Austrian labor market since World War II. Its effects have been surprisingly small, however, considering the scale of the decline in real economic activity. The reason for this moderate impact was that total hours worked declined more sharply than headcount employment. The working hour reductions were much more substantial than can be explained by short-time work alone, though. An international comparison shows country differences in the extent to which the decline in employment was based on reductions in headcount or hours worked per employee. Austria and Germany are among those countries in which hours worked declined most sharply, which made it possible to keep more people in employment. Even though labor market conditions in Austria have been improving over the past few months, unemployment figures and the number of participants in training programs by the Austrian Public Employment Service are still higher than they were before the crisis. Employment figures, too, have not yet returned to precrisis levels.. Classification-JEL: E24, J22, J48 Keywords: labor demand, recession, public policy Pages: 25–44 Year: 2010 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:026ff808-41f2-482f-8b01-858dc385ad88/mop_2010_q3_analyses02_tcm16-212050.pdf File-Format: application/pdf File-Size: 805 kb Handle: RePEc:onb:oenbmp:y:2010:i:3:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Wolfgang Pointner Author-Name-First: Wolfgang Author-Name-Last: Pointner Author-Email: wolfgang.pointner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Alfred Stiglbauer Author-Name-First: Alfred Author-Name-Last: Stiglbauer Author-Email: alfred.stiglbauer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7435 Title: Changes in the Wage Distribution in Austria: An Analysis Based on European Union Structure of Earnings Survey Data Abstract: The dispersion of hourly wages in Austria hardly changed between 1996 and 2002. Somewhat weaker growth at the bottom of the distribution implies that wage inequality increased slightly. Compared with other EU countries, however, the distribution of wages remained remarkably stable in Austria. A decomposition of the changes in the wage distribution shows that the relatively small overall change is attributable to some contrasting developments. Apparently, both market-driven and predetermined factors contributed to this marginal increase in wage inequality. In particular, higher education levels and higher returns to education caused stronger growth in the upper wage dispersion range. At the same time, the rise in women’s participation in the workforce was one of the main reasons for lower wages to grow less strongly. These developments caused higher wage inequality on the one hand; on the other hand, the returns to general work experience deteriorated, which, in turn, had an equalizing effect on wages. The data also show that the differences in wages for men and women remained almost unchanged over time. Classification-JEL: J22, J31 Keywords: wage structure, quantile regression, Machado-Mata decomposition, European Union Pages: 45–58 Year: 2010 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:3d980564-33f5-48b8-a72b-97a17af19922/mop_2010_q3_analyses03_tcm16-212051.pdf File-Format: application/pdf File-Size: 831 kb Handle: RePEc:onb:oenbmp:y:2010:i:3:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Manfred Fluch Author-Name-First: Manfred Author-Name-Last: Fluch Author-Email: manfred.fluch@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Communications, Planning and Human Resources Department Author-Name: Fabio Rumler Author-Name-First: Fabio Author-Name-Last: Rumler Author-Email: fabio.rumler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Name: Tina Wittenberger Author-Name-First: Tina Author-Name-Last: Wittenberger Author-Email: tina.wittenberger@oenb.at. Author-Workplace-Name: Oesterreichische Nationalbank Title: Discount Pricing in Austria: Insights into Retail Business Practices and HICP Coverage Abstract: Discount pricing – the strategy of reducing regular prices through quantity, seasonal, cash or promotional discounts, coupons, customer loyalty programs and the like – plays an important role in retail pricing and is widespread business practice in virtually all retail industries in Austria. This is the main result of our study, for which we surveyed major Austrian retailers and analyzed empirical data compiled by A.C. Nielsen. Moreover, we found that shoppers who participate in customer loyalty programs benefit from discounts more frequently and pay less on average than shoppers who do not. In Austria, three out of four consumers held at least one loyalty card in 2008. All in all, some 30 million loyalty cards were circulating in Austria at the time, with five cards per cardholder being the average. 90% of respondents indicated the prospect of instant rebates as the main incentive for holding loyalty cards. The retailers participating in the OeNB survey generate roughly one-third of their sales revenue under customer loyalty programs. On the consumer side, the average level of retail discounting (as established in the OeNB survey) adds up to a purchasing power effect of approximately EUR 300 million a year. In addition, the paper assesses the HICP coverage of discounts with a view to drawing lessons for policymaking. The current measurement practices are found to reflect some but not all forms of discounting. Looking ahead, it would be advisable to change measurement practices to catch the effect of customer loyalty programs, as they are common in many industries and tend to generate higher discounts than other discounting practices. The most suitable method would be to cover retailers who run loyalty programs throughout Austria and offer the same terms to all cardholders. Retail scanners could provide useful price data for inflation measurement. Classification-JEL: D11, D12, E31, L81 Keywords: discount pricing, price differentiation, customer loyalty program, retail business, Pages: 59–89 Year: 2010 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:48fcf3df-8e1b-406f-8c0e-1e9f10104c43/mop_2010_q3_analyses04_tcm16-212054.pdf File-Format: application/pdf File-Size: 614 kb Handle: RePEc:onb:oenbmp:y:2010:i:3:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Helmut Stix Author-Name-First: Helmut Author-Name-Last: Stix Author-Email: helmut.stix@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43(1)404-20-7211 Author-Workplace-Fax: +43(1)404-20-7299 Author-Name: Martin Summer Author-Name-First: Martin Author-Name-Last: Summer Author-Email: martin.summer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7212 Author-Workplace-Fax: +43-1-40420-7299 Title: Technological Change in the Field of Payment Instruments – Long-Term Implications for Monetary Policy and Competition Policy Abstract: In July 2010 the Oesterreichische Nationalbank hosted a workshop entitled “Consumer Payment Choice and the Demand for Money,” which provided insights into state-of-the-art research on payment habits and cash demand. The papers presented showed that there is a vast potential for new research in this field – in particular, when new theoretical approaches are combined with newly available micro data on household payment habits. This holds the promise of uncovering interesting new findings on the implications of technological change in the field of payment instruments for monetary and competition policies. Thus, it is of substantial importance for central banks to participate in such research activities. Pages: 92–97 Year: 2010 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:815358fd-1873-4550-8c8f-d5ecf2a5ada2/mop_2010_q3_event_wrap01_tcm16-212055.pdf File-Format: application/pdf File-Size: 267 kb Handle: RePEc:onb:oenbmp:y:2010:i:3:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Klaus Vondra Author-Name-First: Klaus Author-Name-Last: Vondra Author-Email: klaus.vondra@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Subdued Economic Recovery given Necessary Fiscal Consolidation: Economic Outlook for Austria from 2010 to 2012 (June 2010) Classification-JEL: C5, E17 Keywords: forecast, Austria Pages: 6–32 Year: 2010 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:f957aaf0-adcd-4930-aee8-b5dc565d7feb/mop_2010_q2_analyses01_tcm16-198119.pdf File-Format: application/pdf File-Size: 784 kb Handle: RePEc:onb:oenbmp:y:2010:i:2:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Pirmin Fessler Author-Name-First: Pirmin Author-Name-Last: Fessler Author-Email: Pirmin.Fessler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Peter Mooslechner Author-Name-First: Peter Author-Name-Last: Mooslechner Author-Email: peter.mooslechner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Martin Schürz Author-Name-First: Martin Author-Name-Last: Schürz Author-Email: martin.schuerz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Real Estate Inheritance in Austria Abstract: As real estate inheritances are an important component of Austrian households’ assets, they are relevant for monetary policymaking and for the maintenance of financial stability. 20% of Austrian households have inherited real estate wealth, with some 2% of all households accounting for around 40% of the overall volume of real estate inheritances in Austria. In aggregate, real estate inheritances constitute up to 23% of households’ total real estate wealth. Households which have inherited differ from those which have not in so far as the former have a higher level of education, earn higher incomes and possess greater real estate wealth. The largest inheritance ratio is in the age group of 50- to 70-year-olds. Households with greater real estate wealth and higher income inherit more often, and they receive larger inheritances. Yet the relative share of inherited real estate properties in total real estate wealth is larger among households with smaller real estate wealth. Less well-off households may come into comparatively considerable real estate wealth through an inheritance. Real estate inheritances are of particular importance for farmers. The majority of real estate owners plan to bequeath their real estate. This intention is rather independent from wealth and income levels. Classification-JEL: D31, D63 Keywords: wealth, distribution, inheritances Pages: 33–53 Year: 2010 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:e043f018-1f5d-4b54-b0d9-5bc9908a8d4a/mop_2010_q2_analyses02_tcm16-198121.pdf File-Format: application/pdf File-Size: 730 kb Handle: RePEc:onb:oenbmp:y:2010:i:2:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Burkhard Raunig Author-Name-First: Burkhard Author-Name-Last: Raunig Author-Email: Burkhard.Raunig@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7219 Author-Workplace-Fax: +43-1-40420-7299 Author-Name: Johann Scharler Author-Name-First: Johann Author-Name-Last: Scharler Author-Email: scharler@sfu.ca Author-Workplace-Name: Simon Fraser University, Department of Economics, 8888 University Drive, Burnaby, B.C., Canada V5A 1S6 Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: (+43-0) 732-2468-8360 Author-Workplace-Fax: (+43-0) 732-2468-9679 Title: Stock Market Volatility and the Business Cycle Abstract: In this paper we provide a review of the literature on the link between stock market volatility and aggregate demand. In particular, we focus on the implications of the so-called uncertainty hypothesis according to which it is primarily the uncertainty associated with stock market fluctuations that influences aggregate demand. Empirical studies find that stock market volatility indeed feeds back into the real economy. Classification-JEL: E44, E20, E30 Keywords: uncertainty hypothesis, conditional volatility, business cycle Pages: 54–63 Year: 2010 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:a85704c7-fd37-4d02-85ce-f117015bfe68/mop_2010_q2_analyses03_tcm16-198122.pdf File-Format: application/pdf File-Size: 779 kb Handle: RePEc:onb:oenbmp:y:2010:i:2:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Jesús Crespo Cuaresma Author-Name-First: Jesús Crespo Author-Name-Last: Cuaresma Author-Email: jcrespo@wu.ac.at Author-Workplace-Name: Vienna University of Economics and Business, Institute for Fiscal and Monetary Policy Author-Name: Anna Orthofer Author-Name-First: Anna Author-Name-Last: Orthofer Author-Email: anna.orthofer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Modeling and Predicting the EUR/USD Exchange Rate: The Role of Nonlinear Adjustments to Purchasing Power Parity Abstract: Reliable medium-term forecasts are essential for forward-looking monetary policy decisionmaking. Traditionally, predictions of the exchange rate tend to be linked to the equilibrium concept implied by the purchasing power parity (PPP) theory. In particular, the traditional benchmark for exchange rate models is based on a linear adjustment of the exchange rate to the level implied by PPP. In the presence of aggregation effects, transaction costs or uncertainty, however, economic theory predicts that the dynamics of the nominal exchange rate around the equilibrium value implied by PPP are nonlinear. This paper presents some of the shortcomings of the traditional linear exchange rate models and assesses whether alternative nonlinear formulations outperform them for forecasting purposes. We find that the theory of nonlinear adjustment to PPP is supported by the data in a threshold cointegration framework for the monthly EUR/USD exchange rate between 1990 and 2010. Furthermore, sizeable gains in terms of medium-term forecast accuracy can be obtained using nonlinear specifications. Classification-JEL: E31, F31, F37 Keywords: exchange rates, purchasing power parity, nonlinearity, threshold models Pages: 64–76 Year: 2010 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:1c2365b4-915b-42fe-875a-c0801600cafe/mop_2010_q2_analyses04_tcm16-198123.pdf File-Format: application/pdf File-Size: 1074 kb Handle: RePEc:onb:oenbmp:y:2010:i:2:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Anna Orthofer Author-Name-First: Anna Author-Name-Last: Orthofer Author-Email: anna.orthofer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Josef Schreiner Author-Name-First: Josef Author-Name-Last: Schreiner Author-Email: josef.schreiner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Klaus Vondra Author-Name-First: Klaus Author-Name-Last: Vondra Author-Email: klaus.vondra@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Recovery of the Global Economy in the Second Half of 2009 Abstract: The world economy has overcome the cyclical trough. On the back of extensive economic stimulus programs, most economies returned to positive growth rates in the second half of 2009, with emerging countries taking the lead. The rate of the recovery, however, diverges strongly across the different regions. Not only the emerging Asian countries grew at a vigorous pace; the U.S. economy, too, posted healthy quarter-on-quarter growth at a rate last seen six years ago. Yet, recentconfidence indicators suggest that economic growth will continue at a slower pace. While the world economic recovery gained momentum in the fourth quarter of 2009, the development of economic activity in the euro area remained below expectations. In comparison with the previous quarter, the economy of the single currency area grew by 0.1% in the fourth quarter of 2009, with growth driven exclusively by the positive contribution of net exports. Euro area domestic demand is unlikely to give growth a genuine boost in the quarters to come. Current forecasts generally point to a gradual recovery of economic activity in the euro area, which will, however, be weaker than the U.S. revival. Euro area HICP inflation returned to positive levels in November 2009. This was due primarily to base effects stemming from commodity prices. The disinflation process of core items, however, is continuing. Given the sluggish recovery in economic activity, the annual core inflation rate fell to a record low of 0.8% in February 2010. The latest forecasts predict that there will be no risks to price stability until the end of 2011. Especially thanks to a slight recovery in international demand, the Central, Eastern and Southeastern (CESEE) EU Member States entered a period of economic stabilization in the second half of 2009, recording – once again – moderately positive average growth rates (on a quarterly basis). However, cyclical developments still vary significantly across the countries of the region. The economic downturn caused current account balances to improve throughout the entire region and brought down inflation rates in several countries. After undergoing the deepest and longest recession in post-war history, Austria registered moderate economic growth in the second half of 2009, supported by the revival of international economic activity, the Austrian government stimulus packages and the inventory cycle. According to recent results of the short-term economic indicator of the Oesterreichische Nationalbank (OeNB), growth is set to remain stable. Real GDP is expected to grow by 0.5% in both the first and the second quarters of 2010 (seasonally and working day adjusted, quarter on quarter). For the entire year 2010 the OeNB expects a real GDP growth rate of about 1½%. Classification-JEL: E2, E3, O1 Keywords: global outlook, euro area, central and (south-)eastern Europe, Austria Pages: 6–25 Year: 2010 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:1c10face-b46d-4804-ae2c-c0d2fb3a7579/mop_2010_q1_analyses_01_tcm16-190375.pdf File-Format: application/pdf File-Size: 515 kb Handle: RePEc:onb:oenbmp:y:2010:i:1:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Ernest Gnan Author-Name-First: Ernest Author-Name-Last: Gnan Author-Email: ernest.gnan@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7400 Author-Name: Johannes Langthaler Author-Name-First: Johannes Author-Name-Last: Langthaler Author-Email: Johannes.Langthaler@oenb.at Author-Name: Maria Teresa Valderrama Author-Name-First: Maria Teresa Author-Name-Last: Valderrama Author-Email: maria.valderrama@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Title: Shocks, the Crisis and Uncertainty about Future Inflation: Theory and Evidence for the Euro Area Abstract: This study is motivated by the recent increase in volatility of both inflation and inflation expectations, triggered initially by the surge in commodity prices and more recently by the global economic crisis. While inflation uncertainty rose only moderately in response to the commodity and energy price shock in 2007, the financial and economic crisis triggered a dramatic increase across all types of agents, which was also reflected in historically large forecast errors. During the final months of 2009, both inflation expectations and uncertainty returned to more moderate levels. Uncertainty about future inflation may pose a problem both for monetary policy and for economic efficiency at large. Our study shows that various strands of economic theory offer quite diverse explanations for the mechanisms behind the formation of inflation expectations and the associated uncertainty. Our econometric estimates suggest that behavioral heuristics and information constraints or bounded rationality may indeed influence agents’ uncertainty about future inflation. For instance, both consumers and professional forecasters seem to invest more effort in forming expectations about future inflation if and when inflation developments become more salient. However, in the case of consumers faced with very large inflation shocks, this effect seems to be dampened by other behaviors. In contrast to consumers, professional forecasters’ uncertainty about future inflation reacts to news about the business cycle and monetary policy, which points to their use of a richer data set and more sophisticated models in forming inflation expectations. Classification-JEL: E31, E52, D84, D80 Keywords: inflation expectations, uncertainty, behavioral economics, heterogeneous agents Pages: 26–52 Year: 2010 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:968c059a-5463-43cb-a375-82c523207d91/mop_2010_q1_analyses_02_tcm16-190387.pdf File-Format: application/pdf File-Size: 806 kb Handle: RePEc:onb:oenbmp:y:2010:i:1:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Jürgen Janger Author-Name-First: Jürgen Author-Name-Last: Janger Author-Email: Juergen.Janger@wifo.ac.at Author-Workplace-Name: Austrian Institute of Economic Research Author-Name: Philipp Schmidt-Dengler Author-Name-First: Philipp Author-Name-Last: Schmidt-Dengler Author-Email: p.schmidt-dengler@lse.ac.uk Author-Workplace-Name: The London School of Economics and Political Science Title: The Relationship between Competition and Inflation Abstract: This study supplements previous empirical work on the relationship between the average rate of inflation and competition by adding a new approach for estimating markups and investigating the annual rate of inflation, price variance and price levels. Subject to certain qualifications, markups can be interpreted as indicators for competition intensity. Our calculation, conducted for 15 countries and 34 sectors, exhibits major differences between the sectors within one country and among the same sectors across various countries. The markups are used to produce estimates of the relationship between competition and inflation (average and annual rates), price levels and price variance. Although a significantly negative correlation with inflation and price variance is evident for the period from 1991 to 2005, competition loses its explanatory power for inflation rates when longer time spans are considered. In terms of economic policy, this study confirms the findings of previous works which identify the intensification of competition as a temporary means of curbing price increases. A new finding from this study is the evidence for the inflation-stabilizing effect of intensified competition, which is caused by its negative correlation with price variance. The fact that no significant relation between price level and competition intensity was found may be attributable to insufficient data. Classification-JEL: L11, L16, E31 Keywords: competition, inflation, markup Pages: 53–65 Year: 2010 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:e3a4c575-2758-4b2a-90a5-85fcf539fc94/mop_2010_q1_analyses_03_tcm16-190403.pdf File-Format: application/pdf File-Size: 592 kb Handle: RePEc:onb:oenbmp:y:2010:i:1:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Jürgen Janger Author-Name-First: Jürgen Author-Name-Last: Janger Author-Email: Juergen.Janger@wifo.ac.at Author-Workplace-Name: Austrian Institute of Economic Research Title: Determinants of Price Comparison and Supplier Switching Rates in Selected Sectors Abstract: This study looks into the factors determining price comparisons and supplier switching as revealed by a representative survey of Austrian consumers. Price comparisons and supplier switching can be interpreted as a measure of the competitive pressure that consumers exert on enterprises. Thereby, they influence the intensity of competition in an industry, which in its turn, curbs inflation and boosts growth. The fundamental driver of switching is the comparison of prices. Those who compare prices not only consider price comparisons but also switching less cumbersome and, hence, switch suppliers more frequently. To a certain extent, search as well as switching costs are perceived to be higher than they actually are, i.e. persons inexperienced in searching and switching suppliers overestimate the difficulties involved. Price comparison behavior is determined by educational attainment (education levels above apprenticeships), gender and (urban or rural) residence. While Internet use is limited for price comparisons, it reduces the efforts required for comparing prices and switching suppliers to a highly significant extent in all sectors. Moreover, search and switching costs play a major role in explaining sectoral differences in price comparison behavior. Therefore, competition intensity could be increased through education reforms, the promotion of Internet usage, sector- specific reductions of search and switching costs as well as awareness-raising measures. The results can be used for further analyses in the field of competition, productivity and inflation. Classification-JEL: D12, L40 Keywords: switching costs, market elasticity, consumer behavior, competition intensity Pages: 66–86 Year: 2010 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:d9653cea-6704-4a5b-8d80-035cb53e219d/mop_2010_q1_analyses_04_tcm16-190416.pdf File-Format: application/pdf File-Size: 772 kb Handle: RePEc:onb:oenbmp:y:2010:i:1:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Helmut Elsinger Author-Name-First: Helmut Author-Name-Last: Elsinger Author-Email: helmut.elsinger@univie.ac.at Author-Workplace-Name: University of Vienna, Department of Business Studies Author-Workplace-Homepage: http://finance2.bwl.univie.ac.at/members/elsinger/elsinger.htm Author-Workplace-Phone: +43-1-4277 38057 Author-Workplace-Fax: +43-1-4277 38054 Author-Name: Martin Summer Author-Name-First: Martin Author-Name-Last: Summer Author-Email: martin.summer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7212 Author-Workplace-Fax: +43-1-40420-7299 Title: Bank Recapitalization and Restructuring: An Economic Analysis of Various Options Abstract: A financial crisis leads to a debt overhang in the banking sector and subsequently to a credit crunch. In most cases, it is not possible to remedy this situation without economic policy measures. In this study, we use a uniform framework to analyze how banks in a crisis situation can be restructured at minimum cost to the taxpayer in order to enable them to function again. We discuss various forms of intervention: measures which do not affect the rights of existing bank owners and creditors (guaranteeing prior debts, purchasing troubled assets, injecting equity) and measures that do (good bank/bad bank, debt-for-equity swap). Measures which minimize the costs to the taxpayer will necessarily affect the rights of existing owners and creditors, meaning that they also raise issues related to the reform of bank insolvency law. Classification-JEL: G01, G2, G28, G33, G38, H0, H2, H81 Keywords: financial crisis, bank recapitalization policy, bank insolvency, financial regulation Pages: 87–97 Year: 2010 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:0f14986a-e9f1-4acd-a789-63bce206e43f/mop_2010_q1_analyses_05_tcm16-190426.pdf File-Format: application/pdf File-Size: 544 kb Handle: RePEc:onb:oenbmp:y:2010:i:1:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Barry Eichengreen Author-Name-First: Barry Author-Name-Last: Eichengreen Author-Workplace-Name: University of California, Berkeley Title: The Crisis in Financial Innovation Pages: 98–103 Year: 2010 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:62acbbeb-3ef7-4dd2-a3d5-876509a92422/mop_2010_q1_analyses_06_tcm16-190441.pdf File-Format: application/pdf File-Size: 361 kb Handle: RePEc:onb:oenbmp:y:2010:i:1:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Sluggish Economic Recovery – Conditions in the Labor Market Remain Strained<br />Economic Outlook for Austria from 2009 to 2011 (December 2009) Abstract: Economic Outlook for Austria from 2009 to 2011 (December 2009) Classification-JEL: C5, E17 Keywords: forecast, Austria Pages: 6–32 Year: 2009 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:c3ad8e39-6081-47ef-b886-3ce60d02f2f7/mop_2009_q4_analyses_01_tcm16-181761.pdf File-Format: application/pdf File-Size: 353 kb Handle: RePEc:onb:oenbmp:y:2009:i:4:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Bernhard Grossmann Author-Name-First: Bernhard Author-Name-Last: Grossmann Author-Email: bernhard.grossmann@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Jürgen Janger Author-Name-First: Jürgen Author-Name-Last: Janger Author-Email: Juergen.Janger@wifo.ac.at Author-Workplace-Name: Austrian Institute of Economic Research Author-Name: Lukas Reiss Author-Name-First: Lukas Author-Name-Last: Reiss Author-Email: lukas.reiss@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Fiscal and Structural Policy Challenges Created by the Economic Crisis of 2008–2009 Abstract: The economic crisis of 2008–2009 has greatly compounded the challenge of economic policymaking at the EU level and at the national level. This study focuses on the related real economy aspects, namely on fiscal and structural policies. Judging from current trends, Austria will most probably not be able to reduce its high deficits of 2009 and 2010 via economic growth alone. Furthermore, the repercussions of the crisis on public finances are going to be exacerbated in the medium term by the implications of demographic change. These developments result in a considerable need for consolidation, which will go significantly beyond the need to finance the economic stimulus packages ex post – but by how much cannot be estimated precisely as yet. At any rate, it will be important to coordinate the necessary consolidation measures internationally, not to undertake consolidation before the economic recovery becomes self-sustained, and to avoid conflicts with other economic policy goals. Having analyzed the medium- to long-term structural growth potential which may support fiscal consolidation, we find Austria to have got some catching-up potential in terms of labor supply and productivity compared with typical comparison countries. This catching-up potential is good news, as this means that Austria should find it easier than other countries to revive growth. With a view to offsetting the crisis-related loss in potential growth in the medium term, which would materially support consolidation efforts, policymakers could leverage growth above all by raising employment, improving the education system, enhancing competition policies and reforming innovation funding. Economic policymakers in Austria and elsewhere have indeed got the power to influence the growth path after the crisis. Classification-JEL: H6, O38, O52 Keywords: economic growth, structural reforms, financial crisis, fiscal consolidation Pages: 33–60 Year: 2009 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:261b597b-133d-4916-9f01-165b58fa1e7d/mop_2009_q4_analyses_02_tcm16-181762.pdf File-Format: application/pdf File-Size: 605 kb Handle: RePEc:onb:oenbmp:y:2009:i:4:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Michael Andreasch Author-Name-First: Michael Author-Name-Last: Andreasch Author-Email: michael.andreasch@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, External Statistics, Financial Accounts and Monetary and Financial Statistics Author-Name: Pirmin Fessler Author-Name-First: Pirmin Author-Name-Last: Fessler Author-Email: Pirmin.Fessler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Austrian Households’ Equity Capital – Evidence from Microdata Abstract: To date, research on household wealth has seldom focused on households’ business equity holdings. Such equity stakes represent above all ownership in domestic limited liability companies. This study for the first time provides an empirical analysis of the distribution of Austrian households’ equity stakes in limited liability companies. For our analysis, we draw on data from three sources: the Company Register, a commercial database and the OeNB’s 2004 Survey on Financial Household Wealth. In 2005, some 3% of Austrian households possessed equity capital worth around EUR 22.3 billion, which equaled about 6% of total financial wealth. These equity investor households are characterized by above-average incomes and wealth. Compared with the other households, they are also much more frequently invested in risky assets, tend to own their principal residence and have considerably higher education levels. Such equity holdings are highly concentrated even within this group of investor households. Classification-JEL: C80, D14, D31, D43, E21, L11 Keywords: households, business assets, private foundations, wealth distribution, limited liability Pages: 61–78 Year: 2009 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:acfe10a1-3826-4215-bb80-bc6309a3b2bd/mop_2009_q4_analyses_03_tcm16-181763.pdf File-Format: application/pdf File-Size: 595 kb Handle: RePEc:onb:oenbmp:y:2009:i:4:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Markus Knell Author-Name-First: Markus Author-Name-Last: Knell Author-Email: markus.knell@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7218 Author-Workplace-Fax: +43-1-40420-7299 Author-Name: Alfred Stiglbauer Author-Name-First: Alfred Author-Name-Last: Stiglbauer Author-Email: alfred.stiglbauer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7435 Title: Wage Staggering and Wage Leadership in Austria – Review and Implications Abstract: This study examines the importance of wage staggering and wage leadership in the Austrian system of collective bargaining. Collective wage agreements in Austria generally remain valid for one year and are staggered; the highest concentrations of new agreements can be found in the months of January, May and November each year. The relevant literature describes Austrian wage bargaining as a system of wage leadership, with the agreement reached by the metal workers, which usually goes into effect in early November of each year, setting a precedent for wage agreements reached by other sectors in the ensuing months. Through an analysis of detailed individual series from the Index of Agreed Minimum Wages, it is actually possible to provide empirical evidence for the existence of wage leadership. The results also show that the wage-leading metal sector is substantially more sensitive to macroeconomic forecasts than the other sectors are. This phenomenon and the rapid transmission to the sectors that follow are probably key reasons why empirical evidence of high real wage flexibility has been found in Austria. Classification-JEL: E31, E32, E24, J51 Keywords: staggered wage contracts, wage leadership, collective wage agreements, Austria Pages: 79–97 Year: 2009 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:fbc6bb3e-b6e3-4554-9520-ac7ef7f80dce/mop_2009_q4_analyses_04_tcm16-181764.pdf File-Format: application/pdf File-Size: 466 kb Handle: RePEc:onb:oenbmp:y:2009:i:4:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Claudia Kwapil Author-Name-First: Claudia Author-Name-Last: Kwapil Author-Email: claudia.kwapil@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: (+43-1) 404 20-7415 Author-Workplace-Fax: (+43-1) 404 20-7499 Title: Actual Implications of the Current Economic Crisis for Austrian Enterprises – Results of a Company Survey Abstract: This article is based on the results of a survey conducted among 731 Austrian companies and supplements the known macroeconomic facts about the current economic crisis with micro data. While a decline in demand was the main challenge companies faced, they also had to cope with financing problems and customers’ payment difficulties. 16% of Austrian companies reported major or even severe financing difficulties owing to the crisis, with small enterprises feeling a greater impact than large firms. Furthermore, the survey showed that the crisis caused enterprises to increasingly save on wage costs. Here, companies hit hard by the crisis cut costs primarily through layoffs, followed by a reduction in working hours. Although base wages were cut more frequently than in economically calm times, this measure continued to be the exception rather than the rule even during the crisis, which indicates the existence of nominal wage rigidities in Austria. Classification-JEL: C25, E24, J30 Keywords: wage rigidities, demand shock, survey data Pages: 98–110 Year: 2009 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:78cf2ccf-052a-4111-8ff6-c859aeb71a80/mop_2009_q4_analyses_05_tcm16-181765.pdf File-Format: application/pdf File-Size: 366 kb Handle: RePEc:onb:oenbmp:y:2009:i:4:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Andreas Breitenfellner Author-Name-First: Andreas Author-Name-Last: Breitenfellner Author-Email: andreas.breitenfellner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Jesús Crespo Cuaresma Author-Name-First: Jesús Crespo Author-Name-Last: Cuaresma Author-Email: jcrespo@wu.ac.at Author-Workplace-Name: Vienna University of Economics and Business, Institute for Fiscal and Monetary Policy Author-Name: Catherine Keppel Author-Name-First: Catherine Author-Name-Last: Keppel Author-Email: Catherine.Keppel@oenb.at Title: Determinants of Crude Oil Prices: Supply, Demand, Cartel or Speculation? Abstract: Understanding the factors driving crude oil price developments is essential for assessing their effects. This paper examines four groups classifying a total of some thirty potential determinants of crude oil prices: fundamental factors, i.e. supply and demand, factors relating to the structure of the crude oil market (OPEC), and factors associated with the behavior of financial market participants (speculation). Bayesian Model Averaging (BMA) allows us to analyze a multitude of potential explanatory variables under model uncertainty and to quantify their robustness in explaining oil price inflation (price changes in percent). The results of our analysis suggest that the significance of individual factors varies over time. While no single factor dominates throughout the entire period under review (1983 to 2008), models explaining short-term movements in oil prices should always include headline inflation indicators and take into account the persistence of oil prices. In the 1990s, also the production quota of Saudi Arabia – a factor relating to the market structure – played a significant role; in the 2000s, both supply and demand (European demand for oil and refining capacities) have been highly important factors. The results of our analysis do not preclude the possibility that determinants other than those discussed here may become significant in the long run. While fundamental shortage conditions play a key role in driving up the pric Classification-JEL: Q30, Q31, C11, C52 Keywords: oil price, Bayesian model averaging Pages: 111–136 Year: 2009 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:996ab297-c6e6-493d-8b0b-09371e47667d/mop_2009_q4_analyses_06_tcm16-181766.pdf File-Format: application/pdf File-Size: 1027 kb Handle: RePEc:onb:oenbmp:y:2009:i:4:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Wolfgang Pointner Author-Name-First: Wolfgang Author-Name-Last: Pointner Author-Email: wolfgang.pointner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Josef Schreiner Author-Name-First: Josef Author-Name-Last: Schreiner Author-Email: josef.schreiner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Edging Out of Recession Abstract: The global slowdown appears to have come to an end during the summer of 2009. Most countries saw a smaller decline in economic activity in the second quarter, with some economies even recording positive growth rates once again. In the U.S.A., the economic contraction moderated in the second quarter of 2009, with the government’s economic stimulus packages and net exports making positive contributions to GDP growth, and the negative contribution from investment decreasing significantly vis-à-vis the previous quarter. With the household saving rate rising sharply, private consumption is making a negative contribution to growth. Although this development may help to reduce global imbalances, it could dampen the recovery in the U.S.A. In the euro area, too, there are signs of a gradual improvement, with GDP declining by a mere 0.1% quarter on quarter in the second quarter of 2009. This growth was underpinned not only by a strong positive contribution from net exports, but also consumption. The likelihood of a further increase in consumption, however, is uncertain, as the labor market situation is set to deteriorate and because consumer demand has recently been bolstered by fiscal stimulus packages that were only temporary. Investment remained weak, as capacity utilization was extremely low. Current forecasts predict a gradual recovery in the euro area economy. In the summer of 2009, euro area inflation bottomed out, with the HICP falling by 0.7% in July. This was due primarily to base effects stemming from commodity prices. The latest forecasts predict that there will be no risks to price stability until the end of 2010. The Central, Eastern and Southeastern European countries also recorded considerable declines in GDP growth in the first half of 2009. However, the stabilization of the financial markets, as well as leading indicators, suggest that there will be an improvement over the rest of the year. In many countries, the recession brought about reductions in current account deficits. After posting negative growth rates for four consecutive quarters, the Austrian economy is set to pick up again in the second half of 2009, mainly on the back of improved external conditions, fiscal stimulus packages and inventory cycle developments. The OeNB’s latest short-term indicator results show real GDP growth at 0.4% in both the third and fourth quarters of 2009 (seasonally and working day-adjusted, on a quarterly basis). Owing to the sharp slump recorded at the beginning of the year, a 3.6% contraction is forecast for the full year 2009. Classification-JEL: E2, E3, O1 Keywords: global outlook, euro area, central and (south-)eastern Europe, Austria Pages: 6–25 Year: 2009 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:89f2f67f-ea5a-4421-886f-08335457f11b/mop_2009_q3_analyses01_tcm16-143518.pdf File-Format: application/pdf File-Size: 601 kb Handle: RePEc:onb:oenbmp:y:2009:i:3:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Paul Gaggl Author-Name-First: Paul Author-Name-Last: Gaggl Author-Email: pgaggl@ucdavis.edu Author-Workplace-Name: University of California at Davis, Department of Economics Author-Name: Jürgen Janger Author-Name-First: Jürgen Author-Name-Last: Janger Author-Email: juergen.janger@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Will the Great Recession Lead to a Lasting Impact on Potential Output in Austria? Abstract: Based on the European Commission’s (2009) projections for potential output, we calculate a permanent potential output loss of between 4% and 6% until 2013, while we expect that the growth rate will eventually return to its precrisis level of close to 2% in the medium run before the effects of population aging set in. We do not expect high growth rates of actual GDP during the recovery. In a more pessimistic view, the effects of the crisis may seamlessly link with the effects of population aging on potential output, implying a decrease in trend potential output growth to about 1.5% by 2030. In an optimistic scenario, by 2011 most of the structural effects of the crisis will have disappeared and productivity growth will accelerate by 2020 to compensate for declining labor input, stabilizing the path of potential output. While uncertainty is high, it is likely that anti-climate-change policies, energy scarcity and an increase in both competition and demand from emerging markets will provide powerful incentives to innovate and invest. Adequate economic policies will be required in order to respond positively to these incentives. The crucial role of policies in raising medium-term output after severe recessions is also demonstrated by countries such as Finland, Sweden and Japan. Classification-JEL: O11, E32 Keywords: potential output, financial crisis Pages: 26–52 Year: 2009 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:120d170d-74bf-4357-810a-5a70748d2062/mop_2009_q3_analyses02_tcm16-143519.pdf File-Format: application/pdf File-Size: 729 kb Handle: RePEc:onb:oenbmp:y:2009:i:3:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Simona Delle Chiaie Author-Name-First: Simona Delle Author-Name-Last: Chiaie Author-Email: simona.delle-chiaie@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division, P.O. Box 61, A-1010 Vienna Title: A Survey on Monetary Policy and Potential Output Uncertainty Abstract: This study provides a survey of recent theoretical and empirical works analyzing the implications of imperfect information about potential output for the conduct of monetary policy. Using small-scale New Keynesian models, most of these studies conclude that, under optimal monetary policy, output gap uncertainty leads to persistent deviations between the actual and the perceived output gap in response to supply and cost-push shocks. As a consequence, the monetary policy stance turns out to be systematically looser than under perfect information in periods of large reductions in potential output, and overly restrictive relative to this benchmark in periods of large expansions in potential output. Although these previous studies shed light on the economic mechanisms by which the imprecise measurement of potential output may affect the policy behavior and thus, the dynamics of inflation, their quantitative findings depend on the assumptions about the information set available to the policymaker. In this respect, a useful role for unit labor costs emerges. This indicator provides information about potential output, and it strongly improves the central bank’s ability to make stabilization policy more effective. Classification-JEL: E4, E5 Keywords: monetary policy, potential output uncertainty, indicator variables, real unit labor costs Pages: 53–61 Year: 2009 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:b27664d5-551a-4fdd-9cd6-d21e1dd6e079/mop_2009_q3_analyses03_tcm16-143520.pdf File-Format: application/pdf File-Size: 304 kb Handle: RePEc:onb:oenbmp:y:2009:i:3:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Nicolas Albacete Author-Name-First: Nicolas Author-Name-Last: Albacete Author-Email: Nicolas.Albacete@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Housing Finance of Austrian Households Abstract: This study presents a first summary of the housing finance results of the OeNB’s Household Survey on Housing Wealth in Austria. 22% of Austrian households have taken out debt to finance housing. The probability of holding such debt is significantly higher for younger and higher- income households than for others. High-income households are much more likely to have a variable rate loan or a foreign currency loan, but at the same time they also have lower loanto- value (LTV) ratios than the other groups. Regional differences – or more specifically, a west-east pattern – were identified regarding the type and amount of debt incurred: Austrian households in the western provinces tend to have higher debt and higher LTV ratios than those in the eastern provinces. Housing assistance funds and alternative forms of financing, such as inheritances or inter vivos gifts (money), play quite a significant role in housing finance. Austrian households use their property mainly for residential purposes rather than as an investment instrument: Of the households with outstanding housing loans, 74% used (at least part of) the money to purchase their primary residence, 12% used it to finance the deposit they had to make for their housing association apartment, and 17% purchased a second home. 52% of the households that took out a loan to purchase a second property use it for residential or similar purposes, while 26% of them offer it for rent and the remaining households (roughly one-quarter) use it as a store of value. These facts and the existence of a strongly subsidized rental market seem to have contributed to the rather low ownership ratio and the moderate development of Austrian real estate and rental prices by international standards. The differences identified in the structure of housing finance of Austrian households suggest that the impact of monetary policy on wealth (and hence on household consumption and investment) will also differ markedly. Classification-JEL: D14, D31, R21, R31, E52 Keywords: household’s wealth, real assets, housing finance Pages: 62–92 Year: 2009 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:7d426b06-ab08-48ce-a1f6-17d8f26b2981/mop_2009_q3_analyses04_tcm16-143521.pdf File-Format: application/pdf File-Size: 481 kb Handle: RePEc:onb:oenbmp:y:2009:i:3:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Peter Brandner Author-Name-First: Peter Author-Name-Last: Brandner Author-Email: Peter.Brandner@bmf.gv.at Author-Workplace-Name: Federal Ministry of Finance Author-Workplace-Homepage: http://www.wifo.ac.at Author-Workplace-Phone: +43(1) 798-2601-0 Author-Workplace-Fax: +43(1)798-9386 Author-Name: Harald Grech Author-Name-First: Harald Author-Name-Last: Grech Author-Email: harald.grech@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.suerf.com/Hochreiter/ Author-Workplace-Phone: +43-1-40420-7213 Author-Workplace-Fax: +43-1-40420-7299 Title: EU Representation at the IMF – A Voting Power Analysis Abstract: To analyze the consequences of a hypothetical consolidated EU representation at the IMF, we regroup the 27 EU Member States into a euro area EU constituency and a non-euro area EU constituency (based on the IMF’s new quota formula) and calculate voting power measures as proposed by Penrose-Banzhaf (PBI) and Shapley-Shubik (SSI). For theoretical reasons and reasons of empirical plausibility, we favor the results based on the SSI. Concerning the Executive Board, our results confirm the PBI-based evidence in the literature, as we find that the two large constituencies (U.S.A and euro area) would have more voting power than their voting shares indicate. Above majority thresholds of 67%, the PBI and SSI results become increasingly divergent, with the difference being most pronounced at the majority threshold of 85%, at which the PBI has already plunged dramatically whereas the SSI remains more or less constant. Concerning the Board of Governors, we find that voting power depends on both EU-related decision rules and the power measure used. If decision-making within the group is based on EU Council votes, smaller EU Member States tend to gain voting power and would hence have an incentive to push EU consolidation. By contrast, most of the larger EU Member States tend to lose voting power and might consequently be inclined to retain the status quo. However, above all by bundling individual euro area concerns, a consolidated euro area representation would act as a booster for the euro area as a whole. Classification-JEL: C71, D71 Keywords: IMF, EU, voting power analysis Pages: 93–126 Year: 2009 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:f84c0cc3-7e1d-439a-9253-a26616f4871c/mop_2009_q3_analyses05_tcm16-143522.pdf File-Format: application/pdf File-Size: 1138 kb Handle: RePEc:onb:oenbmp:y:2009:i:3:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Klaus Vondra Author-Name-First: Klaus Author-Name-Last: Vondra Author-Email: klaus.vondra@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Economic Crisis Unleashes Deep Recession in Austria – Stabilization Expected at Year-End Abstract: According to the June 2009 economic outlook of the Oesterreichische Nationalbank (OeNB), the Austrian economy is projected to enter a deep recession in 2009 owing to the global slump in growth, with real GDP set to shrink by 4.2%. After further declining by a modest 0.4% in 2010, positive real annual GDP growth of 1.2% will reemerge only in 2011. Compared with the OeNB December 2008 economic outlook, growth expectations for 2009 and 2010 were downgraded by 3.9 and 1.2 percentage points respectively. This major revision reflects the steep slump in the demand for exports and investment – unparalleled in the post-war period. The current downturn is so pronounced that GDP levels seen in 2007 will not return until 2011. HICP inflation will ease from 3.2% in 2008 to a mere 0.4% in 2009 and rise modestly to 1.1% and 1.2% in 2010 and 2011 respectively. Classification-JEL: C5, E17 Keywords: economic outlook, austria Pages: 6–40 Year: 2009 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:91c3447f-3239-4b03-a5df-382833175a2e/mop_2009_q2_analyses01_tcm16-141270.pdf File-Format: application/pdf File-Size: 771 kb Handle: RePEc:onb:oenbmp:y:2009:i:2:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Ernest Gnan Author-Name-First: Ernest Author-Name-Last: Gnan Author-Email: ernest.gnan@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7400 Author-Name: Johann Scharler Author-Name-First: Johann Author-Name-Last: Scharler Author-Email: scharler@sfu.ca Author-Workplace-Name: Simon Fraser University, Department of Economics, 8888 University Drive, Burnaby, B.C., Canada V5A 1S6 Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: (+43-0) 732-2468-8360 Author-Workplace-Fax: (+43-0) 732-2468-9679 Author-Name: Maria Antoinette Silgoner Author-Name-First: Maria Antoinette Author-Name-Last: Silgoner Author-Email: Maria.Silgoner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Inflation Expectations – Role and Measurement for Monetary Policy Abstract: Inflation expectations play a crucial role in modern monetary policy, given their capacity to influence actual inflation and given their informative value on the central bank’s credibility with regard to safeguarding price stability. The risk of a de-anchoring of inflation expectations in the wake of soaring energy and commodity prices figured among the key motivations for international hikes in official interest rates between 2007 and mid-2008. But also the recent abrupt decline in headline inflation – driven by the collapse in energy and commodity prices as well as the sharp global recession – may bear the risk of affecting inflation expectations, this time downward. An appropriate conceptualization and measurement – in real time – of inflation expectations is therefore essential for successful monetary policy. Building on the current state of economic theory and central bank practice, this study addresses four questions: First, which agents’ or sectors’ inflation expectations should be considered? Second, what time horizon of inflation expectations is relevant for monetary policy decisions? Third, what are the relative merits and drawbacks of the various available measures of inflation expectations in the light of the answers to the first two questions? Finally, how do shocks to inflation expectations affect actual inflation in the euro area? The study finds, first, that to gauge future risks for inflation and to assess central bank credibility comprehensively across various constituencies, it would be desirable to capture wage and price setters’ inflation expectations better than so far. Second, besides the much-quoted long-term inflation expectations, also medium-term inflation expectations (beyond one and below five years) should be given due consideration. Third, the available empirical measures of inflation expectations only partly fit these conceptual requirements. Given the important limitations of the proxy measures currently available in the euro area, we recommend further research and improving data coverage. Finally, the study confirms empirically that shocks to expected inflation account for a considerable part of actual inflation dynamics. The influence is stronger for financial market-based measures and for forecasters’ inflation expectations than for measures based on consumer expectations. This may also reflect the longer time-horizon of these indicators. Thus, expectation shocks may represent a serious risk for price stability. Classification-JEL: E31, E58 Keywords: inflation expectations, monetary policy, heterogeneity, VAR models Pages: 41–67 Year: 2009 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:04267f89-b249-45f6-9dfd-51bbf5e5f98f/mop_2009_q2_analyses02_tcm16-141271.pdf File-Format: application/pdf File-Size: 672 kb Handle: RePEc:onb:oenbmp:y:2009:i:2:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Claudia Kwapil Author-Name-First: Claudia Author-Name-Last: Kwapil Author-Email: claudia.kwapil@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: (+43-1) 404 20-7415 Author-Workplace-Fax: (+43-1) 404 20-7499 Title: Responses of Austrian Firms to a Decline in Demand – Results of a Company Survey Abstract: Based on a survey of around 560 Austrian firms conducted within Wage Dynamics Network (WDN) of the ESCB this study investigates how these firms respond to a decline in demand. About 80% of the firms surveyed report that they consider cutting costs a relevant or highly relevant measure in response to a demand shock. The interpretation of the responses suggests that such cost cuts mitigate, at least in part, the drop in output and thus tend to dampen the shock. Furthermore, 55% of firms stated that they would primarily cut nonlabor costs, while 45% would rather cut labor costs; also, firms would rather dismiss employees than cut their base wages. This attitude of Austrian firms can be mainly traced to their fear of declines in labor productivity. Classification-JEL: C25, E31, J30 Keywords: survey data, demand shock, wage rigidities Pages: 68–82 Year: 2009 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:ee24818f-6641-482a-9458-b81caceb30ca/mop_2009_q2_analyses03_tcm16-141272.pdf File-Format: application/pdf File-Size: 656 kb Handle: RePEc:onb:oenbmp:y:2009:i:2:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Paul Gaggl Author-Name-First: Paul Author-Name-Last: Gaggl Author-Email: pgaggl@ucdavis.edu Author-Workplace-Name: University of California at Davis, Department of Economics Title: The Role of Exchange Rate Movements for Prices in the Euro Area Abstract: This study provides new evidence on the degree of exchange rate pass-through (ERPT) within the euro area after the launch of the euro up to the end of 2007. ERPT to import, producer, and consumer prices is estimated within a simple vector auto regression (VAR) framework. ERPT in the euro area is found to be broadly consistent with earlier studies in that it exhibits the following properties: ERPT (a) is incomplete; (b) decreases along the distribution chain; (c) might have slightly decreased; and (d) varies significantly across individual EMU member countries. Classification-JEL: F31, F40 Keywords: foreign exchange, open economy macroeconomics Pages: 83–103 Year: 2009 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:3505c4e0-998c-43c7-bb1f-6cfa665eb4f5/mop_2009_q2_analyses04_tcm16-141273.pdf File-Format: application/pdf File-Size: 1107 kb Handle: RePEc:onb:oenbmp:y:2009:i:2:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Pirmin Fessler Author-Name-First: Pirmin Author-Name-Last: Fessler Author-Email: Pirmin.Fessler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Peter Mooslechner Author-Name-First: Peter Author-Name-Last: Mooslechner Author-Email: peter.mooslechner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Martin Schürz Author-Name-First: Martin Author-Name-Last: Schürz Author-Email: martin.schuerz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Housing Wealth of Austrian Households Abstract: Real estate holdings, i.e. housing wealth and estates in land account for the majority of assets owned by Austrian households. At the same time, the associated mortgage loans constitute the bulk of households’ liabilities. Therefore, detailed data on real estate holdings and real estate financing are highly relevant both from the monetary policy perspective and with regard to the objective of maintaining financial stability. This is why in September 2008 the Governing Council of the ECB decided to initiate a comprehensive project aimed at collecting comparable data on household assets and liabilities across the euro area. All Eurosystem central banks will take part in this project. Many other central banks, including those in the U.S.A., Italy, Spain and Cyprus, have a long tradition of collecting and analyzing such data. As a first contribution by the Oesterreichische Nationalbank (OeNB) to this Eurosystem project, this study provides the first microdata-based assessment of Austrian households’ real estate holdings. In the primary residence category, Austrian households’ average housing wealth is estimated at EUR 130,000 (or at EUR 110,000, excluding the top 1% of observations in the real estate wealth distribution of the primary residence), while their average total housing wealth is estimated to come to EUR 250,000 (or EUR 200,000, excluding the top 1% of observations in the total real estate wealth distribution). The total housing wealth of Austrian households is estimated at a minimum of EUR 690 billion. Classification-JEL: D14, D31, R21, R31 Keywords: households’ wealth, real assets, housing finance Pages: 104–124 Year: 2009 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:05542940-e675-4261-ba63-28ceb78beec8/mop_2009_q2_analyses05_tcm16-141274.pdf File-Format: application/pdf File-Size: 691 kb Handle: RePEc:onb:oenbmp:y:2009:i:2:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Andreas Breitenfellner Author-Name-First: Andreas Author-Name-Last: Breitenfellner Author-Email: andreas.breitenfellner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Author-Name: Josef Schreiner Author-Name-First: Josef Author-Name-Last: Schreiner Author-Email: josef.schreiner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Global Recession Deepens Financial Crisis Unleashes Global Economic Downturn Abstract: The financial crisis, which has intensified since fall 2008, has led to deteriorated funding conditions, a decline in the confidence of economic players and a dramatic slump in world trade, thereby unleashing a global recession. Governments worldwide launched measures to stabilize the financial systems and stimulate economic activity, which helped prevent a further escalation of the financial crisis. Since economic stimulus measures require some time to take full effect, a deep recession must be anticipated for 2009. In the U.S.A., an end to the recession is not in sight, despite comprehensive measures taken to support the economy. The Federal Reserve System (Fed) cut key interest rates to their lowest level historically and is now pursuing unconventional policies in a bid to revive lending. In the euro area, recession also deepened in the fourth quarter of 2008, especially due to weakening export demand and investment; unemployment rose substantially. According to leading indicators and forecasts, the economic situation will continue to deteriorate in the first half of 2009. A glimmer of hope may be seen in the fact that a number of confidence indicators seem to have hit bottom at a low level in recent weeks, implying that the downturn may level out from the second half of 2009 and then come to an end. Driven particularly by falling energy, commodity and food prices, HICP inflation decelerated markedly in recent months and in both 2009 and 2010 is expected to remain significantly below the level of price stability as defined by the Eurosystem. The past few months have also shown that the previously fast-growing emerging economies cannot escape the crisis. In particular, a number of Central, Eastern and Southeastern European countries have been hit severely. Other countries in the region, by contrast, are facing a worse, albeit still more upbeat outlook than the euro area average. The global economic crisis also hit Austria in fall 2008, resulting in a steep slump in goods exports and industrial production in October 2008. The OeNB economic indicator currently predicts real GDP to contract by 1.5% in the first quarter of 2009 (seasonally and working-day adjusted, on a quarterly basis). The Austrian economy is expected to continue to shrink by 0.7% in the second quarter of 2009. Classification-JEL: E2, E3, O1 Keywords: wealth effects, financial wealth, marginal propensity to consume out of wealth, saving behavior, financial crisis Pages: 10–28 Year: 2009 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:8c2fb3fd-3908-4471-bddb-a54669c256d8/mop_2009_q1_in_focus01_tcm16-111588.pdf File-Format: application/pdf File-Size: 242 kb Handle: RePEc:onb:oenbmp:y:2009:i:1:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Klaus Vondra Author-Name-First: Klaus Author-Name-Last: Vondra Author-Email: klaus.vondra@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Austria’s Exports to Eastern Europe: Facts and Forecasts Likely Impact of Slowing Exports on Growth in Austria Abstract: In 2008, 72.1% of all Austrian goods exports went to the EU-27; thereof, 17.6% went to the Eastern European states that joined the EU in 2004 and 2007, and 24.6% to Eastern Europe at large. While export demand for Austrian goods has declined markedly since the end of 2008, in the context of the international economic crisis, exports to the “new” Member States declined somewhat less than those going to the “old EU.” This article offers a brief overview of the extent and development of Austrian exports to Eastern Europe, the latest growth forecasts for these countries, and their implications for Austria’s growth forecast. The latest forecasts for Eastern Europe, while pessimistic and mixed in line with the global trend, indicate that growth rates – especially in the “new” EU Member States – are still higher (or that recessions are still weaker) on average than in Western Europe. Simulations with the OeNB’s macro model show that the growth setbacks anticipated for Eastern Europe by the latest forecasts are likely to push the decline in Austria’s real GDP growth another 0.7 percentage points below the rate implied by the OeNB’s December 2008 forecast. Classification-JEL: E17, F15, F47 Keywords: Austria, forecast, Eastern Europe, exports Pages: 29–43 Year: 2009 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:73269de0-c8f1-45a4-9496-5f9d74ae5858/mop_2009_q1_in_focus02_tcm16-111589.pdf File-Format: application/pdf File-Size: 222 kb Handle: RePEc:onb:oenbmp:y:2009:i:1:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: A Leading Indicator of Austrian Exports Based on Truck Mileage Abstract: The close correlation between economic activity and freight performance is emphasized in numerous international studies. With regard to Austria, timely information on truck mileage has been available since 2004 when Austria introduced road pricing. In this study, truck road pricing data compiled by the Austrian highway authority (ASFINAG) are analyzed for the first time with respect to their adequacy as a leading indicator for various macroeconomic indicators. The results show that truck mileage is a good leading indicator above all for goods exports. The timely availability provides an information advantage in analyzing economic developments of two to three months relative to the first release of export data by Statistics Austria. Classification-JEL: E32, E37, F17 Keywords: leading indicator, transport volume, export activity, business cycle, forecasting Pages: 44–52 Year: 2009 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:b7a1084a-fcca-4a38-9988-e42ce2c84b7d/mop_2009_q1_in_focus03_tcm16-111590.pdf File-Format: application/pdf File-Size: 271 kb Handle: RePEc:onb:oenbmp:y:2009:i:1:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Clemens Jobst Author-Name-First: Clemens Author-Name-Last: Jobst Author-Email: clemens.jobst@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Monetary Policy Implementation during the Crisis in 2007 to 2008 Abstract: Since the outbreak of turbulence in the financial markets in August 2007, the implementation of monetary policy – typically a peripheral aspect for observers of monetary policy – has attracted increased attention. The heightened attention was accompanied by uncertainty about how to interpret the liquidity measures taken and what to make of the new instruments introduced. This contribution provides the facts needed to properly understand central bank measures by focusing on the euro area and the U.S.A. Essentially, observers need to be aware that today, the main avenue of monetary policy implementation is interest rates rather than monetary aggregates such as the monetary base. Moreover, adjusting the liquidity implementation framework is not necessarily tantamount to changing the monetary policy stance. Finally, the specific institutional frameworks of individual central banks have a bearing on how they implement monetary policy. The contribution concludes with a description of possible techniques for implementing monetary policy under very low interest rates. Classification-JEL: E43, E58 Keywords: monetary policy implementation, financial crisis, operating procedures, money market, quantitative easing Pages: 53–77 Year: 2009 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:243dc14c-74fa-4ab4-bb49-136ee4ceaf3b/mop_2009_q1_in_focus04_tcm16-111591.pdf File-Format: application/pdf File-Size: 347 kb Handle: RePEc:onb:oenbmp:y:2009:i:1:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Walpurga Köhler-Töglhofer Author-Name-First: Walpurga Author-Name-Last: Köhler-Töglhofer Author-Email: walpurga.koehler-toeglhofer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Lukas Reiss Author-Name-First: Lukas Author-Name-Last: Reiss Author-Email: lukas.reiss@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: The Effectiveness of Fiscal Stimulus Packages in Times of Crisis Abstract: This paper provides theoretical and empirical evidence on the effectiveness of discretionary fiscal policy in times of crisis. In “normal” times, a whole range of arguments speaks against the use of discretionary fiscal policy for stabilization purposes – yet amid the current sharp economic downturn, many of those arguments (such as implementation lags or low fiscal multipliers) have comparatively little weight. The OeNB estimates that the measures the Austrian government has adopted so far – an inflation package, two economic stimulus packages, personal income tax reform brought forward – will increase GDP by roughly ¾% and will provide for 12,000 additional jobs in 2009. The effects of those measures are expected to continue into 2010. However, as Austria’s debt ratio stands to increase substantially at the same time, the government would be well-advised to commit itself to cutting the deficit and debt ratios when the crisis is over. Classification-JEL: E32, E62, E65 Keywords: discretionary fiscal policy, effectiveness of fiscal policy, fiscal multipliers Pages: 78–99 Year: 2009 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:93116c87-ec9d-47cd-a284-a028a17d00bd/mop_2009_q1_in_focus05_tcm16-111592.pdf File-Format: application/pdf File-Size: 277 kb Handle: RePEc:onb:oenbmp:y:2009:i:1:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Friedrich Fritzer Author-Name-First: Friedrich Author-Name-Last: Fritzer Author-Email: friedrich.fritzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7417 Author-Name: Ernst Glatzer Author-Name-First: Ernst Author-Name-Last: Glatzer Author-Email: ernst.glatzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at Title: Group-Specific Inflation Rates for Austrian Households Abstract: The consumer price index commonly computed by national statistical agencies can be interpreted as a weighted average of price indices for individual households, with the weights proportional to the total consumption expenditure of each household. In other words, the aggregate consumer price index is usually not a perfect indicator of the inflation experience of individual households. The extent to which household-specific inflation rates diverge from headline inflation generally depends on three things: 1) the divergence of consumption patterns across consumer units; 2) the divergence of expenditure budgets across households; and 3) the divergence of price developments across expenditure items. To estimate the divergence of group-specific consumer price indices across Austrian households, we construct group-specific inflation rates for the period from 2000 to October 2008 and evaluate consumption patterns across household groups. Households were grouped using a mix of two characteristics: a) household composition (i.e. male/female singles; two adults; three or more adults; lone parents; three or more persons, including children); b) low, medium or high household income. The study finds households with lower total spending to have experienced a higher inflation rate than the “average” consumer in the period under review. The average gap was about –0.1 percentage points annually. Second, the inflation contribution of housing and food (including nonalcoholic beverages) was higher for lower-income groups. Third, higher-income households usually have a higher inflation share of transport than lower-income households. Fourth, households with children and larger households do not necessarily suffer above-average inflation. Classification-JEL: E31, C43, C81 Keywords: price level, inflation, index numbers and aggregation, group-specific inflation, microeconomic data Pages: 102–117 Year: 2009 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:33f76cf8-dc06-4c3a-bcf7-24ab782eabd0/mop_2009_q1_analyses01_tcm16-111584.pdf File-Format: application/pdf File-Size: 305 kb Handle: RePEc:onb:oenbmp:y:2009:i:1:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Doris Prammer Author-Name-First: Doris Author-Name-Last: Prammer Author-Email: doris.prammer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Public Sector Outsourcing: Creative Accounting or a Sustainable Improvement? – A Case Study for Austria Abstract: The key rationale for public sector outsourcing is normally to improve public sector delivery as well as the state of public finances as defined by the Maastricht criteria. Like the underlying motives, the ensuing effects may also be diverse, however: increased business efficiency is generally accompanied by redistribution effects, and public sector outsourcing can affect the state’s role as a service provider and may have implications for the state’s stabilizing function. By the same token, the fiscal effects of such outsourcing are not always clear-cut. While the fiscal balance can typically be “improved” in the short term, the common fiscal indicators tend to become less meaningful as a result. The long-term fiscal effects of public sector outsourcing – especially, on long-term fiscal sustainability – have barely been researched. As a review of two Austrian outsourcing cases – BIG (federal facility management company) and ÖBB (Austrian Federal Railways) – shows, public sector outsourcing has a major impact on the assessment of fiscal sustainability without actually improving fiscal sustainability itself. Classification-JEL: E62, H62, H63 Keywords: sustainability of public finances, effects of public-sector outsourcing, creative accounting Pages: 118–135 Year: 2009 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:4021a6db-adca-4ba1-91e2-97986720f334/mop_2009_q1_analyses02_tcm16-111586.pdf File-Format: application/pdf File-Size: 211 kb Handle: RePEc:onb:oenbmp:y:2009:i:1:b:7 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Klaus Vondra Author-Name-First: Klaus Author-Name-Last: Vondra Author-Email: klaus.vondra@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Decline in National Product Albeit by a Smaller Margin than in the Euro Area. Sharp Drop in Inflation Abstract: According to the December 2008 outlook of the Oesterreichische Nationalbank (OeNB), the Austrian economy is expected to enter into recession in 2009 as a result of the financial crisis and the global economic slump. On the strength of the buoyant first half of 2008, real GDP is projected to grow by 1.6% in 2008; in 2009, however, it will shrink by 0.3%. In 2010, the Austrian economy is expected to bounce back modestly, posting GDP growth of 0.8%. Compared with the OeNB June 2008 outlook, growth expectations for 2009 and 2010 were slashed by 2.0 and 1.6 percentage points, respectively. Owing to both commodity and oil price rises, inflation will reach a record annual high (since 1992) of 3.3% in 2008. In 2009 and 2010, however, it is expected to drop sharply to 1.4% and 1.6%, respectively. Classification-JEL: C5, E17 Keywords: forecast, Austria Pages: 10–37 Year: 2008 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:dc8b9081-6fad-414b-93be-58fab4ba5bd7/mop_2008_q4_in_focus_01_tcm16-97555.pdf File-Format: application/pdf File-Size: 308 kb Handle: RePEc:onb:oenbmp:y:2008:i:4:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Walter Waschiczek Author-Name-First: Walter Author-Name-Last: Waschiczek Author-Email: walter.waschiczek@oenb.at. Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Are There Signs of a Credit Crunch in Austria? Abstract: This study examines the existing statistical evidence on corporate loan growth for signs of a credit crunch in Austria. With regard to banks’ loan supply, the Austrian results of the bank lending survey show that since the onset of the crisis in summer 2007 lending has been affected by deteriorated refinancing conditions in the interbank market and has become more restrictive. Loan demand, which in the first half of 2008 was still fairly brisk based on expanding investment and a sound earnings situation in the corporate sector, is likely to sag in the near future as a decrease in the willingness to invest is to be expected. The credit standing of firms is expected to deteriorate for cyclical reasons in the near future, too, which would also contribute to a slowdown in lending. As it seems to be relatively likely that loan supply will decline more strongly than loan demand, the emergence of a credit crunch cannot be ruled out in Austria. Classification-JEL: E51, G21, G32 Keywords: bank lending, credit crunch, corporate finance Pages: 38–53 Year: 2008 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:6fa341dd-9c67-464b-81cd-16dfc7d950f7/mop_2008_q4_in_focus_02_tcm16-97556.pdf File-Format: application/pdf File-Size: 196 kb Handle: RePEc:onb:oenbmp:y:2008:i:4:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Clemens Jobst Author-Name-First: Clemens Author-Name-Last: Jobst Author-Email: clemens.jobst@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Claudia Kwapil Author-Name-First: Claudia Author-Name-Last: Kwapil Author-Email: claudia.kwapil@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: (+43-1) 404 20-7415 Author-Workplace-Fax: (+43-1) 404 20-7499 Title: The Interest Rate Pass-Through in Austria – Effects of the Financial Crisis Abstract: Lending rates are a key element in the transmission of monetary impulses to the real economy, even more so in bank-based financial systems such as the Austrian one. This article examines whether the turbulence in the financial markets and the – according to banks – resulting difficulties in raising funds in money and capital markets has led to a change in the passthrough of money market interest rates to retail interest rates. This study finds that there has been a statistically significant temporary change in the relationship between market and lending rates since July 2007 for some loan categories. However, contrary to expectations, lending rates (for business and housing loans with rate fixation periods of one to five years) were increased less than the historical correlation would have suggested. One possible explanation for this is the prevalence of relationship banking in Austria, which results in banks protecting their customers from too much volatility in interest rates. Overall, however, we do not ascertain any significant deviation from the historical pattern. Classification-JEL: C22, E43 Keywords: interest rate pass-through, financial crisis, monetary policy transmission Pages: 54–67 Year: 2008 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:223ca580-d816-43b5-b1c3-46ebbec5d9ce/mop_2008_q4_in_focus_03_tcm16-97557.pdf File-Format: application/pdf File-Size: 237 kb Handle: RePEc:onb:oenbmp:y:2008:i:4:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Pirmin Fessler Author-Name-First: Pirmin Author-Name-Last: Fessler Author-Email: Pirmin.Fessler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Wealth Effects on Consumption in Austria Abstract: Between the start of the financial crisis in the third quarter of 2007 and the third quarter of 2008, Austrian household sector losses arising from investment in tradable securities amounted to approximately EUR 24 billion. This study uses micro and macro data to examine the possible consequences of this loss of wealth on the consumption behavior of households. Micro data for Austria indicate that owing to unequal distribution, it is primarily the wealthier households that have been directly affected by the crisis. However, all households may be impacted by the consequences of the financial crisis via confidence effects, irrespective of whether they hold securities or not. Estimates based on macro data show that the marginal propensity to consume out of wealth of Austrian households is 0.05 and thus within the international average. Results of Oesterreichische Nationalbank (OeNB) simulations using a macroeconometric model indicate that a decrease in wealth has a relatively minor effect on private consumption and economic growth in Austria. Moreover, this effect only occurs with a substantial lag. Due to the historic singularity of the current financial crisis, however, above all the indirect confidence effects could be more intense than estimated. Classification-JEL: E21, E44, D14, D10, D31 Keywords: wealth effects, financial wealth, marginal propensity to consume out of wealth, saving behavior, financial crisis Pages: 68–84 Year: 2008 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:268a330e-d9e8-4a0c-8b8a-94b9049c811e/mop_2008_q4_in_focus_04_tcm16-97558.pdf File-Format: application/pdf File-Size: 256 kb Handle: RePEc:onb:oenbmp:y:2008:i:4:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Martin Summer Author-Name-First: Martin Author-Name-Last: Summer Author-Email: martin.summer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7212 Author-Workplace-Fax: +43-1-40420-7299 Title: The Financial Crisis in 2007 and 2008 Viewed from the Perspective of Economic Research Abstract: Many economists monitored the developments that led to the financial crisis in 2007 and 2008 with concern. The course and depth of the crisis, however, came as a surprise to many. This paper discusses whether there are structural deficits in economic research which prevent a deeper analytical understanding of the current crisis. While research on specific aspects of the current crisis mechanisms and their structural causes has been pursued very actively in recent years, this research has not yet been incorporated into the mainstream of macroeconomics and finance – a fact that hinders analytical understanding of the crisis. Classification-JEL: E51, G1, G21, G28 Keywords: financial crisis, financial stability Pages: 85–100 Year: 2008 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:7318ec69-909a-4475-b781-5da3dac4f93c/mop_2008_q4_in_focus_05_tcm16-97559.pdf File-Format: application/pdf File-Size: 195 kb Handle: RePEc:onb:oenbmp:y:2008:i:4:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Andreas Breitenfellner Author-Name-First: Andreas Author-Name-Last: Breitenfellner Author-Email: andreas.breitenfellner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Jesus Crespo Cuaresma Author-Name-First: Jesus Crespo Author-Name-Last: Cuaresma Author-Email: jesus.cuaresma@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Crude Oil Prices and the USD/EUR Exchange Rate Abstract: This paper investigates the impact of changes in the U.S. dollar/euro exchange rate on crude oil prices. The negative correlation of these two variables is ascribed to five possible channels: on the supply side, the purchasing power of oil export revenues and on the demand side, local prices in non-U.S. dollar regions, investments in crude oil-related asset markets, the monetary policy regime in oil-exporting countries and the efficiency of the currency market. We give evidence that using information on the U.S. dollar/euro exchange rate (and its determinants) significantly improves oil price forecasts. We discuss the possible implications these results might suggest with regard to the stabilization of oil prices or the adjustment of global imbalances. Classification-JEL: C53, F31, Q43 Keywords: oil price, exchange rate, forecasting, multivariate time series models Year: 2008 Issue: 4 Price: 102–121 File-URL: https://www.oenb.at/dam/jcr:3fc304e2-39dc-4770-b893-78ff81e96065/mop_2008_q4_analyses_01_tcm16-97551.pdf File-Format: application/pdf File-Size: 283 kb Handle: RePEc:onb:oenbmp:y:2008:i:4:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Housing Market Challenges in Europe and the United States – Any Solutions Available? Abstract: On September 29, 2008, the Oesterreichische Nationalbank (OeNB) hosted a workshop entitled “Housing Market Challenges in Europe and the United States - any solutions available?” The workshop’s objective was to discuss the most recent developments in housing markets and housing finance. Housing prices have developed quite differently in Europe in the last decade. Austria, for example, has faced very moderate price increases compared with, for example, Spain, the U.K. or Central, Eastern and Southeastern Europe. Most economic studies claim that monetary policies exert a major influence on housing price developments, and thus transmission mechanisms are a focus of research. But additionally, different institutional features of housing finance as well as regulatory/fiscal arrangements play an important role in any explanation of house price developments. The first session addressed the recent crisis in the U.S. housing market and considered possible solutions. Session 2 offered an overview of developments in European housing markets and their macroeconomic implications, while session 3 dealt with micro data on housing wealth. Session 4 highlighted regulation and fiscal aspects. The last session was about statistics on housing markets. A panel discussion concluded the workshop. Classification-JEL: R31, R21, D53, G21 Keywords: housing markets, housing finance, financial crisis Pages: 124–134 Year: 2008 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:8ad2b506-4ce2-4fc8-ad0d-42dc8662d57c/mop_2008_q4_highlights_01_tcm16-97553.pdf File-Format: application/pdf File-Size: 156 kb Handle: RePEc:onb:oenbmp:y:2008:i:4:b:7 Template-Type: ReDIF-Article 1.0 Author-Name: Martin Schürz Author-Name-First: Martin Author-Name-Last: Schürz Author-Email: martin.schuerz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Saving in Austria – Too Little and Too Late? Abstract: On October 24, 2008, the Oesterreichische Nationalbank (OeNB) held an international workshop entitled “Saving in Austria – Too Little and Too Late?”. The purpose of the event was to devote more attention to an important economic topic which even experts still do not understand sufficiently in all its various facets. In a small group of experts, the following questions were discussed at length: What determines people’s saving behavior? What influencing factors stand in the way of rational saving behavior? And what problems arise in the analytical conceptualization of household saving? Classification-JEL: D14, D91, E21 Keywords: saving, wealth,household decisions,financial literacy Pages: 135–142 Year: 2008 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:7ffeb2dd-b04d-43dd-ad02-ca9e8d24b1a2/mop_2008_q4_highlights_02_tcm16-97554.pdf File-Format: application/pdf File-Size: 127 kb Handle: RePEc:onb:oenbmp:y:2008:i:4:b:8 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Ingrid Haar-Stöhr Author-Name-First: Ingrid Author-Name-Last: Haar-Stöhr Author-Email: ingrid.haar-stoehr@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Maria Antoinette Silgoner Author-Name-First: Maria Antoinette Author-Name-Last: Silgoner Author-Email: Maria.Silgoner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Global Economic Downturn Persists Abstract: The global economic downturn is persisting. In the U.S.A., tax rebates provided only a temporary stimulus to the economy. As the U.S. real estate crisis continues, it triggered the takeover of mortgage finance corporations Fannie Mae and Freddie Mac by their regulator in early September 2008. The crisis of the U.S. real estate and financial sectors, which has gathered momentum lately, sustained high commodity prices and the deterioration in the labor market are all badly damaging consumer confidence. As a reaction to the most recent aggravation of the financial crisis, the U.S. government announced its plan to establish a well-endowed stabilization fund. As to the euro area, economic growth slowed unexpectedly sharply in the second quarter of 2008. Real GDP contracted by 0.2% quarter on quarter. Particularly, gross fixed capital formation made a negative contribution to growth, but also consumer restraint depressed economic performance. The ECB’s current projections assume only a gradual improvement in the economy. Classification-JEL: E2, E3, O1 Keywords: global outlook, euro area, central and (south-)eastern Europe, Austria Pages: 6–20 Year: 2008 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:e2d48245-68d4-4d32-9109-4310a4e651ca/mop_2008_3_konjunktur_tcm16-92351.pdf File-Format: application/pdf File-Size: 277 kb Handle: RePEc:onb:oenbmp:y:2008:i:3:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Konrad Pesendorfer Author-Name-First: Konrad Author-Name-Last: Pesendorfer Author-Email: konrad.pesendorfer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Tax and Economic Growth in Austria Abstract: Taxation influences the behavior of economic agents and, as a consequence, a country’s economic activity and growth. The nature and size of this impact depends on the object or activity taxed as well as on the tax rate and the design of the tax. In a recent survey of 21 countries, the OECD sets up a ranking of tax categories based on their effects on wealth and GDP growth. This study investigates to what extent this ranking reflects the taxation-growth relationship in Austria. To this end, we compare the Austrian tax structure against the tax structure in the countries posting the highest GDP per capita levels and growth rates. Moreover, we assess the individual tax categories’ impact on the key explanatory variables of economic growth. The investigation is based on the central assumption that tax revenues are kept constant and that reducing the revenues from one tax category requires increasing those from another tax source. The analysis shows that the high level of labor taxes, including social security contributions, negatively affects the growth potential in Austria. The relative share of revenues from property taxes, which, according to the OECD survey, hamper economic growth least, is lower in Austria than in almost all other OECD countries. Although the share of revenues from consumption taxes in Austria is comparable to that in the countries posting the best GDP per capita figures, tax rates are necessarily higher because the Austrian VAT system grants numerous exemptions and has a set of reduced rates. The substantial reduction of the tax burden on businesses brought about by the 2004/2005 tax reform improved the conditions for economic growth. The low degree of progressivity of taxes on labor income fosters productivity and economic efficiency rather than the redistribution of income. Classification-JEL: H20, E62, O43 Keywords: taxation, economic growth, Austria Pages: 21–40 Year: 2008 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:5f75c8e0-c921-422c-9355-554a4831753b/mop_2008_3_pesendorfer_tcm16-92373.pdf File-Format: application/pdf File-Size: 334 kb Handle: RePEc:onb:oenbmp:y:2008:i:3:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Matthias Fuchs Author-Name-First: Matthias Author-Name-Last: Fuchs Author-Email: matthias.fuchs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Economic Country Risks Emanating from Austria’s International Exposure Abstract: Austria’s special role as one of the leading investors in Eastern and Southeastern European growth markets increasingly raises questions on the risk capacity of Austria’s foreign portfolio. Using selected macroeconomic indicators, this article assesses the economic country risk attached to Austria’s external assets. A scoring model facilitates the calculation of individual country risks, which are linked to detailed regional data from the external statistics of the Oesterreichische Nationalbank (OeNB), thus enabling us to draw conclusions on the regional and functional risk structure of Austrian international investment. This reveals that, in capitalweighted terms, the developed and leading financial markets of Europe and the U.S.A. have a far stronger influence on total risk than that of the 12 EU entrants since 2004 (EU-12) or the Eastern and Southeastern European countries. Despite its intensive investment in Eastern Europe, Austria’s international risk largely stems from securities holdings in developed industrialized countries. The EU-12 account for no more than a fifth of capital-weighted risk, while the region of Eastern and Southeastern Europe represents just a tenth of total exposure. Nevertheless, some growth markets, such as Hungary, Poland, the Czech Republic or Russia, already have more impact on Austria’s total risk than some Western European markets. The projection up to 2009 suggests a leveling off in the total risk presented by Austria’s external assets. A generally stable development in the EU-27 is somewhat offset by a more unfavorable risk environment in some European growth markets and in the U.S.A. Classification-JEL: F36, G11, G15, G32 Keywords: country risk, financial integration, portfolio choice, international investment position Pages: 41–64 Year: 2008 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:8004fc83-2296-4b41-9e2e-7295be68a4aa/mop_2008_3_fuchs_tcm16-92371.pdf File-Format: application/pdf File-Size: 591 kb Handle: RePEc:onb:oenbmp:y:2008:i:3:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Jesús Crespo Cuaresma Author-Name-First: Jesús Crespo Author-Name-Last: Cuaresma Author-Email: jcrespo@wu.ac.at Author-Workplace-Name: Vienna University of Economics and Business, Institute for Fiscal and Monetary Policy Author-Name: Ernest Gnan Author-Name-First: Ernest Author-Name-Last: Gnan Author-Email: ernest.gnan@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7400 Title: Four Monetary Policy Strategies in Comparison: How to Deal with Financial Instability? Abstract: The article provides a review of the monetary policy strategies of four major central banks – the Eurosystem, the Federal Reserve, the Bank of Japan and the Bank of England – and investigates whether these strategies are modified in times of financial instability. The study finds a number of – statutory and actual – differences regarding the central banks’ objective(s), strategies and approaches to achieve the objective(s), and communication, including the publication of forecasts. While central bank laws are often not very explicit about financial stability, there is consensus that the latter is a major concern in practice. Many see the 2007/2008 financial crisis as yet another reminder that central banks in their monetary policy strategies need to take a longer-term and broader view than might have been suggested only a few years ago. All four central banks’ monetary policy strategies in principle allow for adequate incorporation of financial stability concerns. The lender of last resort function poses challenges for the operational implementation of monetary policy and their credibility as competent and reliable policy institutions. While central banks have been praised for their flexibility in dealing with the recent crisis, this very flexibility may also create moral hazard for the future. Empirical estimates of Taylor-type reaction functions, augmented for a measure of financial instability, confirm some relevant differences in the reaction elasticities to inflation and the output gap, as well as significant effects of financial instability on the interest rate setting behavior of the Bank of England, which are in line with the theoretical view that less inertia in monetary policy should be allowed for in times of financial market risks. Classification-JEL: E52, E58, E63, G18 Keywords: central bank, monetary policy, financial stability, monetary policy strategy, Taylor rule Pages: 65–102 Year: 2008 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:9217f663-0a7c-4a71-a975-07e1b7b95c41/mop_2008_3_cuaresma_gnan_tcm16-92369.pdf File-Format: application/pdf File-Size: 859 kb Handle: RePEc:onb:oenbmp:y:2008:i:3:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Martin Summer Author-Name-First: Martin Author-Name-Last: Summer Author-Email: martin.summer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7212 Author-Workplace-Fax: +43-1-40420-7299 Title: The Economics of Financial Stability: Research Workshop at the OeNB Abstract: On July 7–8, 2008, an international group of researchers met at the Oesterreichische Nationalbank (OeNB) in Vienna to present and discuss current research on Financial Stability. Hyun Song Shin from Princeton University and Martin Summer from the OeNB’s Economic Studies Division, who jointly organized this research workshop, titled the program “The Economics of Financial Stability”. Pages: 104–112 Year: 2008 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:997e1ceb-ce2c-4f33-863f-8caf79966876/mop_2008_3_summer_tcm16-92372.pdf File-Format: application/pdf File-Size: 253 kb Handle: RePEc:onb:oenbmp:y:2008:i:3:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Peter Backé Author-Name-First: Peter Author-Name-Last: Backé Author-Email: peter.backe@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Foreign Research Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-5212 Author-Workplace-Fax: +43-1-40420-5299 Author-Name: Franz Nauschnigg Author-Name-First: Franz Author-Name-Last: Nauschnigg Author-Email: franz.nauschnigg@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, European Affairs and International Financial Organizations Division Title: Global Market Disruptions – Will Global Imbalances Unwind? Abstract: From June 12 to 14, 2008, the Oesterreichische Nationalbank (OeNB) hosted a roundtable discussion on global imbalances at Weißenbach/Attersee co-organized by the European Affairs and International Financial Organizations Division of the OeNB and the Reinventing Bretton Woods Committee (RBWC). The participants, consisting above all of public sector representatives (especially central bankers), market participants and academics, engaged in a lively discussion and a fruitful exchange of information. Classification-JEL: F02, F15, F34, F42 Keywords: global imbalances, capital flows, role of the U.S. dollar, sovereign wealth funds, Bretton Woods Pages: 113–119 Year: 2008 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:cdc37b9b-d1c8-412c-b310-df9bb8bfbb15/mop_2008_3_backe_nauschnigg_tcm16-92370.pdf File-Format: application/pdf File-Size: 291 kb Handle: RePEc:onb:oenbmp:y:2008:i:3:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Financial Crisis and Spike in Commodity Prices Dampen Growth and Fuel Inflation Abstract: According to the June 2008 economic outlook of the Oesterreichische Nationalbank (OeNB), economic growth in Austria is projected to weaken compared with the economic boom years of 2006 and 2007 owing to the international financial crisis and the spike in commodity prices. Real GDP growth is projected to come to 2.2% in 2008 and then dip to a low of 1.7% in 2009 before climbing back to 2.4% in 2010. Compared with the OeNB December 2007 economic outlook, growth expectations for 2008 and 2009 were downgraded by 0.3 and 0.6 percentage points respectively. At 3.1%, inflation in 2008 is at a record high since 1993 but is projected to fall to 2.4% in 2009 and to 1.9% in 2010. Employment growth remains robust, with a further drop in unemployment to 4.2% anticipated for 2008. Classification-JEL: C5, E17 Keywords: forecast, Austria Pages: 6–33 Year: 2008 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:31b46373-c71f-4e58-a0f9-8d39c0fb1704/mop_2008_2_analyses_1_tcm16-88555.pdf File-Format: application/pdf File-Size: 291 kb Handle: RePEc:onb:oenbmp:y:2008:i:2:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Jürgen Janger Author-Name-First: Jürgen Author-Name-Last: Janger Author-Email: juergen.janger@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Supply-Side Triggers for Inflation in Austria Abstract: The supply-side analysis of sectors that have determined price developments in Austria since fall 2007 strongly suggests a lack of competition in the following industries in the medium term: processing and wholesaling of dairy products, pasta production, electricity and gas supply, cement production, and pharmaceutical retailing. Signs of weak competition are less clear but apparent in the following industries: production of fats and oils, clothes retailing, production and wholesaling of pharmaceuticals, car parts trade, sewage disposal and garbage collection. There are few or no indications of a lack of competition in: baked goods production, grain wholesaling, food retailing, home centers, production and wholesaling of construction materials, gas stations and footwear retailing. In food retailing, legitimate business strategies may have contributed to price developments. Moreover, price increases may to some extent have been caused by data limitations (use of shelf inventory data rather than scanner data) and by second-round effects on the part of firms, which find it easier to raise prices in an environment of generally rising prices. Additional in-depth analyses are necessary for a wide range of industries. Economic policymakers may intensify competition in pharmaceutical retailing (by enforcing prescriptions of generic rather than brand-name drugs) and the garbage collection industry (by changing the fee system). Restricting the concentration of regional or local sales units and establishing an integrated European energy market would unlock a (limited) potential for reducing inflation in foods and energy. Policymakers should envisage implementing changes above all in the service sector, which determines inflationary trends in Austria in the medium term. Measures needed to enhance competition include improving data sources, monitoring competition based on economic data, strengthening the competition authority, reforming regulations to ease market entry and to strengthen competition, and increasing price transparency. Classification-JEL: E31, L11 Keywords: competition, inflation Pages: 34–69 Year: 2008 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:f9d4d041-ffe8-4eb8-a328-7e2a94589212/mop_2008_2_analyses_2_tcm16-88556.pdf File-Format: application/pdf File-Size: 357 kb Handle: RePEc:onb:oenbmp:y:2008:i:2:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Fabio Rumler Author-Name-First: Fabio Author-Name-Last: Rumler Author-Email: fabio.rumler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Name: Maria Teresa Valderrama Author-Name-First: Maria Teresa Author-Name-Last: Valderrama Author-Email: maria.valderrama@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Title: Do Aggregate Demand Factors Influence Current Inflation Developments? Abstract: The relationship between inflation developments and aggregate demand is usually modeled with a Phillips curve. This study estimates the Phillips curve for Austria and, for the sake of comparison, for the euro area as well as for four euro area member countries. In order to test the robustness of our results, we estimate both the traditional and the New Keynesian Phillips Curve (NKPC) for the period from 1970 to 2007. We also investigate whether the relationship between economic activity and inflation has changed over time. The results show that there was indeed a significant relationship between inflation and the output gap in most countries; but its coefficient diminished over the years, and became insignificant in almost all countries toward the end of the estimation period. Exceptions are Austria and the Netherlands: For these countries the estimates are not significant, and for Austria we get contradictory results. We can conclude from this and from the observation that the output gap in the countries under review is now slightly negative, or at best closed, that the current rise in inflation is not the result of an overheating economy. Classification-JEL: E31 Keywords: demand-driven inflation, traditional Phillips curve, New Keynesian Phillips Curve Pages: 10–82 Year: 2008 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:cb20948d-d477-4985-8443-232c8980c896/mop_2008_2_analyses_3_tcm16-88557.pdf File-Format: application/pdf File-Size: 301 kb Handle: RePEc:onb:oenbmp:y:2008:i:2:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Pirmin Fessler Author-Name-First: Pirmin Author-Name-Last: Fessler Author-Email: Pirmin.Fessler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Martin Schürz Author-Name-First: Martin Author-Name-Last: Schürz Author-Email: martin.schuerz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Stock Holdings in Austria Abstract: Based on micro data, this study reviews the stock holdings of Austrian households. Stock investment is not widely spread in Austria, and those stock holdings that do exist are concentrated among wealthy, high-income households. This finding from the OeNB’s Survey on Financial Household Wealth (SFHW) ties in with available international data. Classification-JEL: D31, E2, G11, H31 Keywords: portfolio choice, wealth, incomplete portfolios, diversification Pages: 83–100 Year: 2008 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:565c607c-d862-4430-a799-d4efc3453a22/mop_2008_2_analyses_4_tcm16-88558.pdf File-Format: application/pdf File-Size: 199 kb Handle: RePEc:onb:oenbmp:y:2008:i:2:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Andreas Breitenfellner Author-Name-First: Andreas Author-Name-Last: Breitenfellner Author-Email: andreas.breitenfellner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Jesus Crespo Cuaresma Author-Name-First: Jesus Crespo Author-Name-Last: Cuaresma Author-Email: jesus.cuaresma@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Peter Mooslechner Author-Name-First: Peter Author-Name-Last: Mooslechner Author-Email: peter.mooslechner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Doris Ritzberger-Grünwald Author-Name-First: Doris Author-Name-Last: Ritzberger-Grünwald Author-Email: doris.ritzberger-gruenwald@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-5201 Author-Workplace-Fax: +43-1-40420-5299 Title: The Impact of EU Enlargement in 2004 and 2007 on FDI and Migration Flows Gravity Analysis of Factor Mobility Abstract: This paper contributes to the ex post assessment of macroeconomic effects triggered by the 2004 and 2007 wave of EU enlargement, with a specific focus on factor trade, i.e. the crossborder mobility of labor and capital. While most of the potential for trade in goods and for foreign direct investment (FDI) was tapped ahead of actual enlargement, above all migration effects are spread out over a longer period, given transition arrangements for labor market integration. We use (innovative) gravity models to establish the potential for factor trade and crosscheck the results against recent developments. Our key finding is the uneven development of capital and labor mobility since EU enlargement. While migration potentials are materializing as expected, FDI stocks have remained relatively stable at already high levels. Furthermore, we observe a nonlinear relationship between migration and per capita income that may be explained on theoretical grounds and attributed to institutional factors. While the highest-income countries (above all Slovenia and the Czech Republic) are already turning into immigration countries, the low-income countries and those last to join the EU (Bulgaria and Romania) are likely to see further emigration and more FDI inflows. Classification-JEL: C33, F15, O11 Keywords: EU enlargement, factor trade, labor mobility, capital mobility, migration, foreign direct investment, gravity model Pages: 101–120 Year: 2008 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:7157bffd-c0a4-48e9-8736-0441192eb961/mop_2008_2_analyses_5_tcm16-88559.pdf File-Format: application/pdf File-Size: 264 kb Handle: RePEc:onb:oenbmp:y:2008:i:2:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Wolfgang Pointner Author-Name-First: Wolfgang Author-Name-Last: Pointner Author-Email: wolfgang.pointner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Author-Name: Josef Schreiner Author-Name-First: Josef Author-Name-Last: Schreiner Author-Email: josef.schreiner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Inflationary Pressures Worldwide despite Downturn in Growth Abstract: The international environment is increasingly being dominated by a cooling global economy. In the U.S.A., the real estate and financial crisis has spilled over to the real economy. Growth in consumer demand has declined, and the deterioration in the labor market suggests a deepening of this trend. In addition, the leading indicators point to a marked downturn in growth, and major Austrian and international organizations recently downgraded their GDP forecasts for the U.S.A. In the euro area, the economy likewise weakened somewhat in the fourth quarter of 2007. Despite the increased euro exchange rate, net exports made the largest contribution to GDP growth. Domestic demand was driven by gross fixed capital formation while consumer spending was down for the first time since 2001. The latest macroeconomic projections by ECB staff experts anticipate a slowdown in the euro area’s GDP growth for 2008. In February 2008, euro area inflation (based on the HICP) reached 3.3%, a record high since the euro area was created. This rise is primarily attributable to the increase in energy and food prices. The increase in the euro exchange rate occurring in the same period mitigated the inflationary pressures to some extent. The projections for inflation in 2008 were further upgraded. Despite the international financial crisis and its dampening effects worldwide, the Austrian economy looks surprisingly healthy. The OeNB economic indicator of March 2008 signals only a modest downturn in GDP growth for the first half of 2008. Classification-JEL: E2, E3, O1 Keywords: global outlook, euro area, central and (south-)eastern Europe, Austria. Pages: 6–19 Year: 2008 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:fc49290a-a94a-425b-9b3b-0a268aaf7eb1/mop_2008_q1_analyses1_tcm16-84563.pdf File-Format: application/pdf File-Size: 212 kb Handle: RePEc:onb:oenbmp:y:2008:i:1:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Friedrich Fritzer Author-Name-First: Friedrich Author-Name-Last: Fritzer Author-Email: friedrich.fritzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7417 Author-Name: Ernest Gnan Author-Name-First: Ernest Author-Name-Last: Gnan Author-Email: ernest.gnan@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7400 Author-Name: Walpurga Köhler-Töglhofer Author-Name-First: Walpurga Author-Name-Last: Köhler-Töglhofer Author-Email: walpurga.koehler-toeglhofer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Fabio Rumler Author-Name-First: Fabio Author-Name-Last: Rumler Author-Email: fabio.rumler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Name: Alfred Stiglbauer Author-Name-First: Alfred Author-Name-Last: Stiglbauer Author-Email: alfred.stiglbauer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7435 Title: Current Inflation Developments in Austria Abstract: HICP inflation in Austria increased from below 2% in the first half of 2007 to 3.5% in December 2007, and stood at 3.1% in both January and February2 2008. As in other countries, this increase can be mostly attributed to the surge in international energy and agricultural commodity prices. Whereas the increase in the price of crude oil was passed on to fuels very quickly, electricity and gas prices exhibit a delayed reaction. The increase in global prices of agricultural commodities fed through to the prices of dairy products and oils and fats more strongly than it did to bread and cereal product prices. Rates of inflation exceeding 5% were also recorded for clothing and footwear from September to December 2007. The inflation expectations of consumers and professional forecasters for 12 months ahead have risen in light of this; however, professional forecasters generally agree that inflation will decrease to around 2% again in 2009. For the first half of 2008, the Oesterreichische Nationalbank (OeNB) expects the rate of inflation to remain above 3%. Yet by the end of 2008, inflation should slow down significantly to 2.3% as a result of the expected dissipation of the food price shock and the base effect of past energy price increases. On the whole, the OeNB expects the rate of inflation to average 2.8% in 2008. Against this backdrop, the social partners and public policy bear an especially high responsibility: The parties involved in negotiating wage settlements in the coming fall wage round must rise to the challenge of preventing second-round effects. An intensification of competition and the elimination of quantitative agricultural production limits can slow price increases by limiting companies’ price-setting power and/or increasing the supply of agricultural commodities. Given high capacity utilization, stimulating demand through fiscal policy would be detrimental to the goal of reducing inflation. The OeNB estimates that annual inflation in 2008 would be reduced by around + percentage point if all public fees were frozen at their 2007 level. Classification-JEL: E31 Keywords: inflation in Austria, inflation expectations, administered prices. Pages: 20–47 Year: 2008 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:5dac79fa-5c73-4eaf-aaf2-79ceefd7ddf3/mop_2008_q1_analyses2_tcm16-84827.pdf File-Format: application/pdf File-Size: 370 kb Handle: RePEc:onb:oenbmp:y:2008:i:1:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Bernhard Grossmann Author-Name-First: Bernhard Author-Name-Last: Grossmann Author-Email: bernhard.grossmann@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: The Importance of Lease Financing for Austrian Municipalities Abstract: The innovation of this paper is to use Central Credit Register (CCR) data to analyze and assess municipal (local government) leasing activities. Among other things, the analysis highlights the different accounting treatment of (real estate) lease transactions undertaken by local governments in their capacity as market producers and as nonmarket producers. The lease financing volume of municipalities totaled roughly EUR 1.1 billion, thus corresponding to 8.5% on average of total municipal exposures as reflected in the CCR. This aggregate figure masks considerable differences across individual municipalities, for which it is hard to find meaningful theoretical evidence. Those municipalities whose leasing deals have been subject to approval by provinces for the longest period tend to report lower lease shares. At the same time, there is little correlation between the credit quality of a municipality and its exposure to lease financing; evidently, credit quality checks are based on comparable criteria irrespective of the financing model of choice. Likewise, there is only a weak correlation between municipalities’ exposure to lease financing and their level of (residual) debt. More highly indebted local government units have not been found to be more inclined to shifting their portfolios to financing forms that do not push up the level of debt. These results suggest that municipalities thoroughly assess options of lease financing on a case-by-case basis as new borrowing needs arise, and that they have become less likely to go for lease financing ever since such deals have become subject to approval by the provincial governments, just like loans. Classification-JEL: H63, H72, E62 Keywords: lease financing, public debt, credit quality, municipalities Pages: 48–69 Year: 2008 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:41777d0e-ce8d-472a-87dd-9944e5c74798/mop_2008_q1_analyses3_tcm16-84828.pdf File-Format: application/pdf File-Size: 287 kb Handle: RePEc:onb:oenbmp:y:2008:i:1:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Sylvia Gloggnitzer Author-Name-First: Sylvia Author-Name-Last: Gloggnitzer Author-Email: sylvia.gloggnitzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, European Affairs and International Financial Organizations Division Title: The Treaty of Lisbon Abstract: The Treaty of Lisbon is the EU’s new legal framework. The EU heads of state or government have agreed on a new EU treaty conceived to ensure that the enlarged EU consisting of 27 Member States functions more efficiently than under the Treaty of Nice, which is currently in place. The Treaty of Lisbon was signed by EU heads of state or government on December 13, 2007, in Lisbon. The Treaty of Lisbon is to replace the EU Constitutional Treaty rejected in national referendums in France and the Netherlands; it has retained large parts of the constitutional treaty’s substance. First and foremost, the new EU treaty represents a reform that introduces increased majority voting, a clear delimitation of EU competences and a changed institutional framework for EU institutions. Other than the general institutional changes, elements of the Treaty of Lisbon relevant to Economic and Monetary Union (EMU) include, above all, the introduction of price stability to the new treaty’s list of objectives, the institutional status of the ECB and the protection of its independence as well as the strengthening of the Eurogroup. The conditions for EMU set out in the Treaty of Maastricht are now reinforced politically in the Treaty of Lisbon. For the EU’s new legal basis to enter into force on January 1, 2009, as scheduled, the Treaty of Lisbon needs to be ratified by all 27 Member States prior to the elections to the European Parliament in 2009. Classification-JEL: F15, F55, K0, K10, N44 Keywords: Treaty of Lisbon and EMU, ECB an institution of the EU, independence of the ECB. Pages: 70–88 Year: 2008 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:7b58de17-f73a-4250-afa2-26d6e94a31c2/mop_2008_q1_analyses4_tcm16-84830.pdf File-Format: application/pdf File-Size: 243 kb Handle: RePEc:onb:oenbmp:y:2008:i:1:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Klaus Vondra Author-Name-First: Klaus Author-Name-Last: Vondra Author-Email: klaus.vondra@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Growth prospects for Austria are weakening Abstract: 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. Classification-JEL: C5, E17 Keywords: forecast, Austria. Pages: 6–28 Year: 2007 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:78dc8529-841f-4937-8ead-efea698bf3d9/prognose_mop_4_07_tcm16-80411.pdf File-Format: application/pdf File-Size: 346 kb Handle: RePEc:onb:oenbmp:y:2007:i:4:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Comparing the Predictive Accuracy of Macroeconomic Forecasts for Austria from 1998 to 2006 Abstract: 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. Classification-JEL: C53 Keywords: forecast comparison, predictive accuracy, Austria. Pages: 29–49 Year: 2007 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:f0a744c8-2d92-414c-b611-00ef839a61de/mop_2007_4_ragacs_tcm16-82031.pdf File-Format: application/pdf File-Size: 328 kb Handle: RePEc:onb:oenbmp:y:2007:i:4:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Klaus Prettner Author-Name-First: Klaus Author-Name-Last: Prettner Author-Email: klaus.prettner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Alfred Stiglbauer Author-Name-First: Alfred Author-Name-Last: Stiglbauer Author-Email: alfred.stiglbauer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7435 Title: Effects of the Full Opening of the Austrian Labor Market to EU-8 Citizens Abstract: 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. Classification-JEL: J61, E24, R10 Keywords: immigration, labor market effects, European economic integration. Pages: 50–66 Year: 2007 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:f5002a60-07f1-4b68-bdc8-078443312935/mop_2007_4_prettner_tcm16-82034.pdf File-Format: application/pdf File-Size: 282 kb Handle: RePEc:onb:oenbmp:y:2007:i:4:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Antje Hildebrandt Author-Name-First: Antje Author-Name-Last: Hildebrandt Author-Email: antje.hildebrandt@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Foreign Research Division Author-Workplace-Homepage: http://www.oenb.at Author-Name: Maria Antoinette Silgoner Author-Name-First: Maria Antoinette Author-Name-Last: Silgoner Author-Email: Maria.Silgoner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: The Competitiveness Challenge: EU Member States in International Trade Abstract: 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. Classification-JEL: O52, O57, F15, P20 Keywords: indicators of international competitiveness, real effective exchange rate, unit labor costs, country comparison in the EU. Pages: 67–88 Year: 2007 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:6536413a-c186-4739-b3ef-f1de925fe76b/mop_2007_4_hildebrandt__tcm16-82033.pdf File-Format: application/pdf File-Size: 247 kb Handle: RePEc:onb:oenbmp:y:2007:i:4:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Lukas Reiss Author-Name-First: Lukas Author-Name-Last: Reiss Author-Email: lukas.reiss@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: International Trade and Domestic Growth: Determinants, Linkages and Challenges Abstract: 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. Classification-JEL: F10, F43 Keywords: economic growth, trade theory and policy, globalization. Pages: 90–95 Year: 2007 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:bc80648b-a2de-4c23-b63b-adc1fbb485c3/mop_2007_4_reiss_tcm16-82032.pdf File-Format: application/pdf File-Size: 93 kb Handle: RePEc:onb:oenbmp:y:2007:i:4:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Andreas Breitenfellner Author-Name-First: Andreas Author-Name-Last: Breitenfellner Author-Email: andreas.breitenfellner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Johannes Elsinger Author-Name-First: Johannes Author-Name-Last: Elsinger Author-Email: johannes.elsinger@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Klaus Vondra Author-Name-First: Klaus Author-Name-Last: Vondra Author-Email: klaus.vondra@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Robust Economic Activity in the Euro Area Abstract: Global economic activity continued to look robust at mid-2007. In the U.S.A., however, it is currently uncertain how large the impact of the August 2007 crisis in the real estate sector on the real economy will be. Strong growth in the second quarter of 2007 was primarily characterized by dynamic net exports but also by a very modest rise in private consumption. The U.S. Federal Reserve System first reacted to short-term liquidity constraints by unexpectedly cutting its discount rate. After having identified risks to growth, it later reduced the federal funds rate and again cut the discount rate. Economic recovery is slowing in Japan............ Classification-JEL: D12, D14, D91 Keywords: global outlook, euro area, central and (south-)eastern Europe, Austria. Pages: 10–26 Year: 2007 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:ce42a379-2831-489a-b7b5-926ecfb3f468/mop_2007_3_konjunktur_tcm16-69005.pdf File-Format: application/pdf File-Size: 214 kb Handle: RePEc:onb:oenbmp:y:2007:i:3:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Ernest Gnan Author-Name-First: Ernest Author-Name-Last: Gnan Author-Email: ernest.gnan@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7400 Author-Name: Maria Antoinette Silgoner Author-Name-First: Maria Antoinette Author-Name-Last: Silgoner Author-Email: Maria.Silgoner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Beat Weber Author-Name-First: Beat Author-Name-Last: Weber Author-Email: beat.weber@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Economic and Financial Education: Concepts, Goals and Measurement Abstract: A review of the literature and of specific education initiatives reveals a broad range of approaches to economic and financial education. What knowledge areas and skills are targeted and how content is presented very much depends on the motives and goals of the various education providers. Central banks, for instance, provide economic and financial education basically for five reasons: (1) to enhance the effectiveness of monetary policy, (2) to ensure the smooth functioning of financial markets, (3) to support sustainable economic policies, (4) to promote economic and financial literacy as a public good and, (5) by doing so, build their reputation and promote acceptance for their actions. Economic and financial literacy tests have generally uncovered substantial knowledge gaps among citizens. Yet given the methodological deficiencies of the existing analyses, test scores must be interpreted with caution. Improving methodology remains a challenge for future research. Classification-JEL: A20, E58, I21 Keywords: economic and financial literacy, central banks, education. Pages: 28–49 Year: 2007 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:3a9a939c-ff12-4737-b9b5-973c526a34f7/mop_2007_3_gnan_tcm16-69086.pdf File-Format: application/pdf File-Size: 228 kb Handle: RePEc:onb:oenbmp:y:2007:i:3:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Pirmin Fessler Author-Name-First: Pirmin Author-Name-Last: Fessler Author-Email: Pirmin.Fessler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Martin Schürz Author-Name-First: Martin Author-Name-Last: Schürz Author-Email: martin.schuerz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Beat Weber Author-Name-First: Beat Author-Name-Last: Weber Author-Email: beat.weber@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Financial Capability of Austrian Households Abstract: Based on a survey by the Oesterreichische Nationalbank (OeNB) in 2004, this paper aims to assess Austrian households’ financial capability with respect to managing money, planning ahead financially, making financial choices and staying informed. People’s attitudes about money often depend on their education, income and age. A higher level of education, income and age tends to go hand in hand with a more positive financial attitude. The OeNB’s survey, however, revealed that, in the case of Austria, there is generally no relationship between a household’s financial behavior and the education level of its members. Moreover, half of the respondents seldom shop around for financial services and are thus not knowledgeable enough to make informed financial decisions. Classification-JEL: D14, D18, D80, E21, G11, G14, G28 Keywords: financial education, financial capability, financial literacy, private households,surveys. Pages: 50–67 Year: 2007 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:1928dc5e-a929-4550-9735-02d7175d5199/mop_2007_3_fessler_tcm16-69087.pdf File-Format: application/pdf File-Size: 207 kb Handle: RePEc:onb:oenbmp:y:2007:i:3:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Sabine Schlögl Author-Name-First: Sabine Author-Name-Last: Schlögl Author-Email: sabine.schloegl@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Communications Division Title: Financial and Economic Education Products and Services of Austrian Institutions and Enterprises Abstract: Austrian institutions and enterprises offer a broad range of economic and financial literacy products and services, including online products, brochures, folders, economic simulation games, TV and radio programs, presentations, seminars, company visits and guided tours. On closer inspection, however, it turns out that some areas and target groups remain largely neglected: Education products and services for students attending primary and compulsory school are still scarce, while comprehensive material is available for students and teachers of secondary academic or vocational schools. Moreover, the level of knowledge about certain basic economic and financial concepts was generally found to be low. The deficiencies might be addressed by making the existing products and services more easily accessible in a structured fashion and by broadening the range of products and services to cater to the needs of all target groups. Classification-JEL: A20, I20 Keywords: financial and economic education products/services, austrian institutions/enterprises. Pages: 68–84 Year: 2007 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:c308bdf7-0464-491f-8466-e4c7efde8e71/mop_2007_3_schloegl_tcm16-69088.pdf File-Format: application/pdf File-Size: 198 kb Handle: RePEc:onb:oenbmp:y:2007:i:3:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Manfred Fluch Author-Name-First: Manfred Author-Name-Last: Fluch Author-Email: manfred.fluch@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Communications, Planning and Human Resources Department Title: Selected Central Banks’ Economic and Financial Literacy Programs Abstract: This study examines the type and extent of information central banks provide to advance economic literacy in general and financial literacy in particular. Some 30 central banks across the world provide financial education products of varying complexity for different target groups, some in close cooperation with other institutions. Some central banks consider their financial education activities a core competence and give them a prominent role, whereas the “educational visibility” of others is limited. Several central banks have recently launched financial literacy campaigns. Products designed to make people financially knowledgeable are aimed at key target groups, basically children, adolescents, students and teachers. Print products – once the product of choice – have been losing importance. Conversely, central banks use more and more modern knowledge transfer methods, in particular (multilingual) multimedia and e-education packages ranging from online games to multiyear educational programs. Moreover, some central banks have invested heavily in establishing special visitors or training centers, or have pooled knowledge e.g. at money museums. Central banks’ educational Internet resources differ extensively in scope and presentation; only few central banks’ websites provide truly comprehensive and easily accessible information. Financial knowledge transfer appears to work best from simple media and for products that are very strongly focused on individual benefit. Classification-JEL: A20, I20 Keywords: economic education activities, central banks. Pages: 80–104 Year: 2007 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:91e39993-8a18-4c15-9cef-09552498fc49/mop_2007_3_fluch_tcm16-69089.pdf File-Format: application/pdf File-Size: 387 kb Handle: RePEc:onb:oenbmp:y:2007:i:3:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Economic Growth in Austria at 3¼% in 2007 Abstract: According to the economic outlook of the Oesterreichische Nationalbank (OeNB), Austria’s real GDP will grow by 3.2% in 2007, by 2.7% in 2008 and by 2.3% in 2009. The OeNB’s growth forecasts for 2007 and 2008 have been revised upward by 0.4 and by 0.3 percentage point, respectively, since the December 2006 outlook. At 1.7%, the inflation rate in 2007 will stay unchanged against the previous year. In 2008, inflation will come to 1.8% and rise to 1.9% in 2009. Employment growth will continue to remain animated, significantly reducing the unemployment rate from 4.8% in 2006 to 4.2% in 2009. Classification-JEL: C5, E17 Keywords: forecast,Austria Pages: 6–26 Year: 2007 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:78d0729c-7551-45e3-813c-226716ef11b9/mop_2007_2_fenz_ragacs_schneider_tcm16-58300.pdf File-Format: application/pdf File-Size: 282 kb Handle: RePEc:onb:oenbmp:y:2007:i:2:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Output Growth in Austria and Germany: What Explains the Growth Differentials since the Early 1990s? Abstract: This paper attempts to explain the positive growth differential Austria has had over Germany since the early 1990s. While German output growth was dampened in the aftermath of unification, the Austrian economy benefited from a number of positive one-off shocks in the 1990s. Austria has been able to make the most of the opening up of Eastern Europe and witnessed a surge in productivity following EU accession. Moreover, given the predominance of small and medium-sized businesses in Austria, outsourcing abroad was much less of a problem for Austrian employees than for German employees. Finally, Germany saw a marked drop in full-time equivalent employment, which in turn adversely affected consumption and investment. While fiscal policies were not instrumental in generating growth differentials in the 1990s, they have played a role since 2002, as Austria, unlike Germany, has pursued an expansionary fiscal policy course. Differences in the wage-setting process and in corporate taxation provide very little, if any, explanation for the growth differential. Thus, Austria’s positive growth differential basically reflects asymmetric one-off shocks with an effect on current GDP levels rather than on the longterm growth rate. Hence, once the effects of these one-off shocks have subsided, the growth differential is likely to shrink. Classification-JEL: E32, O11, O57 Keywords: Austria, Germany, growth differentials Pages: 27–57 Year: 2007 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:51e1a549-fc77-4a14-a29b-809c57e73c02/mop_2007_2_ragacs_schneider_tcm16-59017.pdf File-Format: application/pdf File-Size: 367 kb Handle: RePEc:onb:oenbmp:y:2007:i:2:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Beer Author-Name-First: Christian Author-Name-Last: Beer Author-Email: chbeer@wu-wien.ac.at Author-Workplace-Name: Vienna University of Economics and Business Administration Author-Name: Martin Schürz Author-Name-First: Martin Author-Name-Last: Schürz Author-Email: martin.schuerz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Characteristics of Household Debt in Austria Abstract: The level of household debt has risen in many countries, including Austria. This study examines whether the increased level of debt represents a risk to financial stability. The data used are mainly derived from a survey on households’ financial wealth conducted by the Oesterreichische Nationalbank (OeNB). Analysis shows that high-income households tend to have more debt than low-income households; the latter, however, are more burdened by their debt. Demand for consumer loans tends to be highest among high-income households with little financial assets. As high debt levels are mostly concentrated among affluent and high-income households, household debt in Austria does not constitute a threat to financial stability. Borrowers with lower incomes and/or low levels of wealth are particularly vulnerable borrowers. Classification-JEL: D12, D14, D91 Keywords: household debt, borrowing, overindebtedness Pages: 58–79 Year: 2007 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:e47a4bb1-b332-4983-b506-2e42c0d86614/mop_2007_2_beer_schuerz_tcm16-59016.pdf File-Format: application/pdf File-Size: 245 kb Handle: RePEc:onb:oenbmp:y:2007:i:2:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Birgit Sauerzopf Author-Name-First: Birgit Author-Name-Last: Sauerzopf Author-Email: birgit.sauerzopf@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Credit Claims as Eligible Collateral for Eurosystem Credit Operations Abstract: The introduction of a “single list” of eligible collateral common to all Eurosystem credit operations on January 1, 2007, replaced the two-tier framework in place until then. Euro area credit claims (i.e. bank loans) have become eligible for use as collateral under the single list, provided they fulfill conditions specified by the ECB. Even though credit claims are more complex than marketable securities in legal as well as administrative terms, their mobilization by Austrian banks as collateral in credit operations with the Oesterreichische Nationalbank (OeNB) has surged since the beginning of 2007. Moreover, the conditions for the cross-border use of credit claims have been adapted for the new single framework; these procedures and euro area enlargement upon Slovenia’s accession lead to the expectation that the cross-border use of credit claims by OeNB counterparties in credit operations with the OeNB will increase. Classification-JEL: E5, K1 Keywords: credit claims, single list, assignment for security purposes. Pages: 80–92 Year: 2007 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:1eefd64d-ca7a-4b6a-b670-16f2b08a1e0f/mop_2007_2_sauerzopf_tcm16-59022.pdf File-Format: application/pdf File-Size: 169 kb Handle: RePEc:onb:oenbmp:y:2007:i:2:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Sylvia Kaufmann Author-Name-First: Sylvia Author-Name-Last: Kaufmann Author-Email: sylvia.kaufmann@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7222 Author-Workplace-Fax: +43-1-40420-7299 Title: Capturing the Link between M3 Growth and Inflation in the Euro Area – An Econometric Model to Produce Conditional Inflation Forecasts Abstract: In this paper, we capture the link between M3 growth and inflation with a vector error correction model. The analysis also includes the 10-year government bond yield, the three-month EURIBOR interest rate and GDP. The long-run link between M3 growth and inflation is observable in the raw data. Over the years 1980–2006, we find that M3 growth and inflation are cointegrated, which means that deviations from long-term average real money growth lead to mean-reverting adjustment processes to restore the average level of real money growth. The full effect of an unexpected monetary shock thus materializes over time in the level of inflation, after a transitory period during which GDP and interest rates have been affected as well. Out-of-sample yearly conditional inflation forecasts are produced from 2001 to 2006 which are compared to Eurosystem staff projections. Qualitatively, the monetary model predicts future inflation rates which are consistent with the ECB’s assessment of future inflation prospects. Classification-JEL: C32, E31, E37, E58 Keywords: M3, monetary analysis, inflation forecasts. Pages: 93–108 Year: 2007 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:33359fff-5376-469b-862e-cc332f2c1229/mop_2007_2_kaufmann_tcm16-59018.pdf File-Format: application/pdf File-Size: 352 kb Handle: RePEc:onb:oenbmp:y:2007:i:2:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Helmut Elsinger Author-Name-First: Helmut Author-Name-Last: Elsinger Author-Email: helmut.elsinger@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://finance2.bwl.univie.ac.at/members/elsinger/elsinger.htm Author-Workplace-Phone: +43-1-4277 38057 Author-Workplace-Fax: +43-1-4277 38054 Author-Name: Christine Zulehner Author-Name-First: Christine Author-Name-Last: Zulehner Author-Email: christine.zulehner@univie.ac.at Author-Workplace-Name: University of Vienna Title: Bidding Behavior in Austrian Treasury Bond Auctions Abstract: To issue Treasury securities by auctions is a common method in many countries all over the world. The auction mechanisms used vary across countries. As our understanding of bidder behavior in Treasury auctions is still rather limited it is not surprising that the question which auction mechanism should be chosen is still unresolved. In this study, we analyze the bidding behavior in Austrian Treasury bond auctions, using a dataset which contains all bids submitted by each bidder as well as the results of 137 Austrian Treasury auctions from February 1991 to May 2006. Bidders in bond auctions have various means to react to changing market conditions: They may change the degree of bid shading, the quantity of Treasury bonds demanded and the dispersion of their bids. This paper aims to investigate how bidders adjust their strategies to varying uncertainty in the bond market, to different numbers of participating bidders and to changes in the volume of bond issues. Classification-JEL: D44, G10 Keywords: treasury auctions, discriminatory price auctions, bid shading, intra-bidder dispersion Pages: 109–125 Year: 2007 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:f6056b5f-942d-4825-bd19-3eea9b6dfdf8/mop_2007_2_elsinger_zulehner_tcm16-59021.pdf File-Format: application/pdf File-Size: 318 kb Handle: RePEc:onb:oenbmp:y:2007:i:2:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Josef Haas Author-Name-First: Josef Author-Name-Last: Haas Author-Email: josef.haas@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: 60 Years of Marshall Plan Aid – A Critical Appraisal from an Austrian Perspective Abstract: Marking the 60th anniversary of the Marshall Plan Speech, which was delivered on June 5, 1947, this paper looks back on the evolution of one of the most important and probably most successful economic programs of recent history – the European Recovery Program (ERP). The famous speech George C. Marshall2 Marshall , then U.S. Secretary of State, gave in front of Harvard faculty members and students 60 years ago, outlined his concept of a comprehensive economic program designed to aid the reconstruction of post-war Europe, which was stricken with hunger, poverty and desperation. This marked the beginning of a momentous economic assistance program under which 16 European states and the Free Territory of Trieste benefited from economic aid in the amount of roughly USD 17 billion between 1948 and 1953. Of this amount, about USD 1.1 billion went to Austria, either in the form of goods or grants, whereas most other Western European countries received U.S. aid in the form of loans. The reason Austria was treated as a special case was primarily its geographically exposed location between East and West. Classification-JEL: F35 Keywords: Marshall Plan, reconstruction of post-war Europe, U.S. aid. Pages: 126–139 Year: 2007 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:63f33924-1126-4528-b576-bb4f7251b517/mop_2007_2_haas_tcm16-59019.pdf File-Format: application/pdf File-Size: 176 kb Handle: RePEc:onb:oenbmp:y:2007:i:2:b:7 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Josef Schreiner Author-Name-First: Josef Author-Name-Last: Schreiner Author-Email: josef.schreiner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Maria Antoinette Silgoner Author-Name-First: Maria Antoinette Author-Name-Last: Silgoner Author-Email: Maria.Silgoner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Euro Area Growth Broad-Based in Early 2006 Abstract: The global economy continued to look robust at end-2006. In the U.S.A. private consumption increased, notwithstanding the protracted housing slowdown, and the services sector continued to grow at a dynamic pace. In view of the still buoyant economy, a cut in U.S. interest rates does not appear imminent. In Japan, the economic recovery persisted, leading the Bank of Japan to raise interest rates in February 2007 – for the first time since ending six years of zero interest rates in July 2006. In China and Southeast Asia, the rapid pace of growth continued to accelerate. In the euro area, real GDP growth accelerated in the fourth quarter of 2006 and is, moreover, increasingly being driven by domestic demand. The latest forecasts indicate above-potential GDP growth in 2007. Furthermore, the labor market developed favorably, with both the actual and structural unemployment rate down by a significant margin. Since September 2006, the rate of inflation has been below the 2% mark owing to, among other factors, the fall in crude oil prices and the hitherto weak pass-through of the increase in Germany’s VAT rate to consumer prices. In this climate the short-term prospects for price stability have improved as well. Classification-JEL: E200, E300, O100 Keywords: economic developments, global outlook, euro area, central and (south-)eastern Europe, Austria. Pages: 12–27 Year: 2007 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:cfbb28ca-7ac6-4731-867d-9d85f2e5f5fa/mop_2007_q1-07_analyses_tcm16-56377.pdf File-Format: application/pdf File-Size: 188 kb Handle: RePEc:onb:oenbmp:y:2007:i:1:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Manfred Fluch Author-Name-First: Manfred Author-Name-Last: Fluch Author-Email: manfred.fluch@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Communications, Planning and Human Resources Department Author-Name: Ernest Gnan Author-Name-First: Ernest Author-Name-Last: Gnan Author-Email: ernest.gnan@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7400 Author-Name: Sabine Schlögl Author-Name-First: Sabine Author-Name-Last: Schlögl Author-Email: sabine.schloegl@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Communications Division Title: Euro Cash in Austria Five Years after Its Introduction – What the Public Thinks Abstract: This paper analyzes Austrian and euro area opinion polls to assess the Austrian public’s views about the single currency five years after the introduction of euro cash. The analysis focuses on the following questions: How are Austrians managing with the euro now? How do Austrians assess the opportunities the euro offers? How did the Oesterreichische Nationalbank (OeNB) and other institutions cope with the communication policy challenges involved in the introduction of the euro? How good a feel have people developed for euro prices? How happy are Austrians with the euro compared with people in other euro area countries? The survey results show that the euro is recognized as a stable currency; it fulfills Austrians’ demand for price stability. People have largely overcome whatever problems they had using the euro in day-to-day transactions initially. The overwhelming majority of people are aware of the advantages the euro has for the economy and for them personally. People’s perception of the value of euro prices is getting better by the year; euro cash is widely accepted. The OeNB’s activities have contributed substantially to the positive attitude toward the euro. A final remaining challenge is the need to dispel the mistaken impression that the euro has contributed to price increases. Other empirical evidence corroborates the widely held belief that the euro has resulted in only a limited degree of price convergence in the euro area. Classification-JEL: E52 Keywords: Euro introduction, assessment, Austria, opinion polls, information measures. Pages: 30–54 Year: 2007 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:7e5484d9-07ae-49b0-a002-f6ab7cf4f42e/mop_2007_q1_in_focus_01_tcm16-56380.pdf File-Format: application/pdf File-Size: 273 kb Handle: RePEc:onb:oenbmp:y:2007:i:1:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Manfred Fluch Author-Name-First: Manfred Author-Name-Last: Fluch Author-Email: manfred.fluch@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Communications, Planning and Human Resources Department Author-Name: Helmut Stix Author-Name-First: Helmut Author-Name-Last: Stix Author-Email: helmut.stix@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43(1)404-20-7211 Author-Workplace-Fax: +43(1)404-20-7299 Title: The Development of Euro Prices – Subjective Perception and Empirical Facts Abstract: This study compares consumers’ subjective price perceptions with official inflation data for the period from the euro cash changeover in 2002 to 2006. At an annual average of 1.7%, the overall rate of inflation has remained low over the past five years despite adverse effects exerted by external factors such as the marked increase in oil prices. In contrast, the prices of frequently purchased consumer goods and services, which people commonly use as price benchmarks, experienced an upward drift. This effect has been potentiated by psychological factors, e.g. price increases tend to fix themselves more firmly in people’s minds than price reductions (of which there have also been a considerable number). In addition, some groups within the population have yet to develop sufficiently firm value perceptions in euro and stop converting euro prices into schilling. Mentally comparing current euro prices with schilling prices that are more than five years old simply distorts the perception of inflation. Yet survey data show that consumers’ value perception is continually improving. The subjective impression of euro-induced inflation has therefore tended to lessen, and by the end of 2006, it was considerably lower than when euro cash was initially introduced. These developments give rise to the hope that people have largely overcome their impression of a “euro price shock” and that headline inflation and perceived inflation will again develop largely in concert in the future. This trend could be encouraged by increasing efforts to communicate price developments to the public. Classification-JEL: E31 Keywords: Austria, euro prices, inflation, perceived inflation Pages: 55–84 Year: 2007 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:44d310e1-79b8-48ab-8e83-14a4a53f8aba/mop_2007_q1_in_focus_02_tcm16-56381.pdf File-Format: application/pdf File-Size: 316 kb Handle: RePEc:onb:oenbmp:y:2007:i:1:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Ernst Glatzer Author-Name-First: Ernst Author-Name-Last: Glatzer Author-Email: ernst.glatzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at Author-Name: Fabio Rumler Author-Name-First: Fabio Author-Name-Last: Rumler Author-Email: fabio.rumler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Title: Price Setting in Austria before and after the Euro Cash Changeover: Has Anything Changed in the Last Five Years? Abstract: This study addresses the question of whether the price adjustment process in Austria has changed since the changeover to euro notes and coins at the beginning of 2002. For this purpose, we analyze the frequency and size of price adjustments, sectoral and seasonal differences as well as the structure of prices (notably the share of attractive prices) on the basis of micro price observations underlying the Austrian Consumer Price Index (CPI). A data set spanning the period from 1996 to mid-2006 was used for the analysis. In addition to confirming known results from previous studies – i.e. that price adjustments occur roughly once per year on average, but with strong sectoral differences – our study reveals an unchanged seasonal pattern of price adjustments, with major peaks in January, also after the cash changeover. At the time of the changeover itself, the observed price changes were more frequent but smaller than usual. As upward and downward price adjustments were also roughly balanced, the cash changeover appears to have had no significant overall inflationary effects, confirming previous studies. The share of attractive prices (i.e. prices ending in 9 or 90, and even prices), which was over 60% before the cash changeover, plummeted to just over 20% in early 2002. In the course of the ensuing three to four years, however, this share again approached the level observed prior to the transition. From these results we conclude that price-setting habits as well as the structure of Austrian consumer prices has not changed significantly since the cash changeover. Classification-JEL: E31, D40, D21 Keywords: Consumer prices, frequency and size of price changes, attractive prices. Pages: 85–99 Year: 2007 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:2a205637-e993-4d25-989c-658dfa2e0f2b/mop_2007_q1_in_focus_03_tcm16-56382.pdf File-Format: application/pdf File-Size: 183 kb Handle: RePEc:onb:oenbmp:y:2007:i:1:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Jesús Crespo Cuaresma Author-Name-First: Jesús Crespo Author-Name-Last: Cuaresma Author-Email: jcrespo@wu.ac.at Author-Workplace-Name: Vienna University of Economics and Business, Institute for Fiscal and Monetary Policy Author-Name: Balázs Égert Author-Name-First: Balázs Author-Name-Last: Égert Author-Email: balazs.egert@oecd.org Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Maria Antoinette Silgoner Author-Name-First: Maria Antoinette Author-Name-Last: Silgoner Author-Email: Maria.Silgoner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Price Level Convergence in Europe: Did the Introduction of the Euro Matter? Abstract: Abstract:Several theoretical arguments suggest that price level divergence across EU countries has diminished in the course of the European integration process as a result of both product market integration and the introduction of the common currency. In this paper, we empirically assess this hypothesis for the euro area countries and a group of control countries since 1990, using price level data on over 160 products and services in 27 European cities. Our conclusions confirm that price convergence took place at the beginning of the 1990s. There is, however, not much evidence that the introduction of the single currency has led to a further narrowing of price differentials. In fact, price dispersion has remained remarkably stable in recent years, whereas it has increased slightly since 2003 in the control group. Classification-JEL: F31 Keywords: price level convergence, euro area, euro. Pages: 100–113 Year: 2007 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:90fa1bb1-d2df-437b-9963-36b8abf5554b/mop_2007_q1_in_focus_04_tcm16-56383.pdf File-Format: application/pdf File-Size: 246 kb Handle: RePEc:onb:oenbmp:y:2007:i:1:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Peter Backé Author-Name-First: Peter Author-Name-Last: Backé Author-Email: peter.backe@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Foreign Research Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-5212 Author-Workplace-Fax: +43-1-40420-5299 Author-Name: Doris Ritzberger-Grünwald Author-Name-First: Doris Author-Name-Last: Ritzberger-Grünwald Author-Email: doris.ritzberger-gruenwald@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-5201 Author-Workplace-Fax: +43-1-40420-5299 Author-Name: Helmut Stix Author-Name-First: Helmut Author-Name-Last: Stix Author-Email: helmut.stix@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43(1)404-20-7211 Author-Workplace-Fax: +43(1)404-20-7299 Title: The Euro on the Road East: Cash, Savings and Loans Abstract: The euro is already present throughout Central, Eastern and Southeastern Europe today. Against this backdrop, the OeNB has been regularly conducting household opinion polls for years in the countries that make up this economic space. The survey questions place special emphasis on euro cash holdings. The results show that the choice to hold euro cash is based on a wide variety of motives, above all geographic proximity, coupled with increasing economic interlinkages, the desire to minimize risk, and tradition. Decisions to have savings in euro or to take out euro-denominated loans can be attributed to similar considerations. In addition, macroeconomic factors such as inflation and exchange rate expectations may also play a role. What clearly emerges is that the extent of currency substitution varies considerably from country to country. In terms of cash, Slovenia, which was about to adopt the euro at the time of the most recent poll, is the frontrunner (approximately 40% of the population reported euro cash holdings in the second half of 2006). Hungary is last, with only a 7% rate. In terms of savings and loans, Croatia posts the highest percentage according to both the OeNB survey and the aggregated bank balance sheet data (approximately 80% of all savings deposits and/or borrowings of households and enterprises are denominated in foreign currency). At the opposite end of the spectrum is the Czech Republic, a country with approximately 10% in both areas. Classification-JEL: E41, E50, O14 Keywords: currency substitution, demand for euro. Pages: 114–127 Year: 2007 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:6d387407-0791-4628-ac5c-9b9e0ee55bdf/mop_2007_q1_in_focus_05_tcm16-56384.pdf File-Format: application/pdf File-Size: 171 kb Handle: RePEc:onb:oenbmp:y:2007:i:1:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Doris Schneeberger Author-Name-First: Doris Author-Name-Last: Schneeberger Author-Email: doris.schneeberger@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Cash and Payment Systems Management Author-Name: Gabriele Süß Author-Name-First: Gabriele Author-Name-Last: Süß Author-Email: gabriele.suess@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Austria’s Experience with Euro Migration since the Cash Changeover Abstract: The introduction of the euro in 2002 offered a unique opportunity to learn more about the patterns and structures of cross-border cash movements. The Oesterreichische Nationalbank (OeNB) has carried out various surveys to analyze the migration of cash in greater depth. This article presents the results of two surveys, which demonstrate that cash is very mobile. An Austrian wallet will typically hold coins and banknotes from almost all euro area countries. Euro coins minted in countries other than Austria are readily discernible, as all coins have a common European face and a distinct national face. For euro banknotes, closer inspection is required, as only the letter contained in the banknote’s number betrays the country of origin. Surveys on cash migration show that the volume of euro banknotes and coins in circulation in Austria, as well as the mix of denominations, remained relatively stable at Austrian households from 2002 to 2004, albeit with a slight increase in the share of foreign banknotes and coins. In Austria, migration continues to generate an influx of banknotes. In particular, EUR 50, EUR 20 and EUR 5 banknotes exhibit a high degree of migration. The results of the two OeNB surveys clearly reveal that banknote migration took place at a considerably faster pace than coin migration. This brief study calculates migration factors for individual countries in order to explain the migration taking place. These factors throw light on whether a country is one of cash emigration or one of cash immigration, while falling short of offering a clear explanation for the underlying reasons of migration. Classification-JEL: E51 Keywords: cash, migration, cross-border cash flows. Pages: 128–137 Year: 2007 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:ba8e01d7-9710-48db-ad2c-1726ed2bccad/mop_2007_q1_in_focus_06_tcm16-56385.pdf File-Format: application/pdf File-Size: 143 kb Handle: RePEc:onb:oenbmp:y:2007:i:1:b:7 Template-Type: ReDIF-Article 1.0 Author-Name: Anton Schautzer Author-Name-First: Anton Author-Name-Last: Schautzer Author-Email: anton.schautzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Cash Logistics in Austria and the Euro Area Abstract: Five years of euro banknotes and coins also means five years of experience with crossborder cash logistics. A total of 11.3 billion euro banknotes valued at EUR 628.2 billion are currently in circulation. Handling this enormous amount of cash involves numerous tasks for the national central banks (NCBs) of euro area countries. For example, NCBs must put banknotes and coins into circulation, monitor cash in circulation and its quality, manage the cash cycle and ensure the public’s trust in the currency. These tasks are coordinated by the ECB and implemented at the national level. Within the Eurosystem, the OeNB has established itself as a competence center for cash logistics. In particular, the OeNB’s organization of the cash cycle based on close cooperation between the central bank and commercial banks in a public-private partnership model has earned worldwide recognition. In 2006, a total of 1.2 billion banknotes and 1.7 billion coins were handled (i.e. checked for fitness and prepared for circulation) in Austria. These quantities clearly illustrate the scope of the underlying efforts and at the same time highlight the need for an efficient organizational structure. The highest priority in this context is to ensure the public’s trust in the currency. For this purpose, it is important to continue developing cash as a product in the future, to invest in the security of cash as a means of payment, and to ensure a high-quality cash supply at the European level. Classification-JEL: E51 Keywords: cash, cash logistics, banknote and coin production, cash in circulation, cash hub. Pages: 138–149 Year: 2007 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:9ee74eb1-e0c8-453a-b248-660455af1ba1/mop_2007_q1_in_focus_07_tcm16-56386.pdf File-Format: application/pdf File-Size: 146 kb Handle: RePEc:onb:oenbmp:y:2007:i:1:b:8 Template-Type: ReDIF-Article 1.0 Author-Name: Martin Handig Author-Name-First: Martin Author-Name-Last: Handig Author-Email: martin.handig@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Financial Statements and Treasury Risk Monitoring Division Author-Name: Robert Holzfeind Author-Name-First: Robert Author-Name-Last: Holzfeind Author-Email: robert.holzfeind@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Euro Banknotes in Circulation and the Allocation of Monetary Income within the Eurosystem Abstract: Banknotes in circulation are traditionally the most important liability item in the balance sheet of central banks. The launch of euro cash created the need to treat this item in new way to reflect the joint liability of all Eurosystem members – the ECB and all national central banks (NCBs) of the euro area – for euro banknotes. In this context, the implications of banknote migration expected both within and outside the euro area, as well as its potential impact on the distribution of profits among the euro area central banks, were subject to extensive discussions already before the cash changeover. A major challenge for the Eurosystem has been the fair allocation of monetary income. This is the income accruing to the individual NCBs in the performance of their monetary policy functions. In particular, this income – traditionally referred to as seigniorage income – includes income derived from assets held against notes in circulation and deposit liabilities to credit institutions. The experience of the first five years after the cash changeover shows that the combination of all relevant aspects of the Eurosystem’s banknote circulation and seigniorage income rules has ensured a fair allocation of monetary income, the functional integrity of the Eurosystem,2 and thus the fulfillment of the objective stipulated by Article 32 of the Statute of the European System of Central Banks3 (ESCB). Classification-JEL: E52, E58 Keywords: Seigniorage, monetary income, banknotes, liability base. Pages: 150–163 Year: 2007 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:21366dcb-2c1d-4c5c-9812-4e5b9f1170df/mop_2007_q1_in_focus_08_tcm16-56387.pdf File-Format: application/pdf File-Size: 171 kb Handle: RePEc:onb:oenbmp:y:2007:i:1:b:9 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Austria’s Economy Will Continue to Grow Dynamically in 2007 Abstract: According to the economic outlook of the Oesterreichische Nationalbank (OeNB), Austria’s real gross domestic product (GDP) is expected to grow by 3.3% in 2006 and by 2.8% and 2.4% in 2007 and 2008, respectively. The OeNB’s growth forecasts for 2006 and 2007 have been revised upward by 0.8 and 0.6 percentage point, respectively, since the June 2006 outlook. Inflation will drop to 1.7% in 2006 and will fall further to 1.4% in 2007. A slight increase to 1.6% is forecast for 2008. Employment will continue to increase substantially, significantly reducing the unemployment rate from 5.2% in 2005 to 4.7% in 2008. Classification-JEL: C5, E17 Keywords: Economic developments, Economic outlook, Austria Pages: 6–25 Year: 2006 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:e3d5818d-72fa-4639-8535-657e7312445c/mop_2006_4_01_tcm16-50836.pdf File-Format: application/pdf File-Size: 262 kb Handle: RePEc:onb:oenbmp:y:2006:i:4:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Claudia Kwapil Author-Name-First: Claudia Author-Name-Last: Kwapil Author-Email: claudia.kwapil@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: (+43-1) 404 20-7415 Author-Workplace-Fax: (+43-1) 404 20-7499 Author-Name: Johann Scharler Author-Name-First: Johann Author-Name-Last: Scharler Author-Email: johann.scharler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: (+43-0) 732-2468-8360 Author-Workplace-Fax: (+43-0) 732-2468-9679 Title: Limited Pass-Through from Policy to Retail Interest Rates: Empirical Evidence and Macroeconomic Implications Abstract: In this paper we survey empirical evidence on the limited pass-through from policy to retail interest rates and summarize some recent research on potential implications for monetary policy and macroeconomic fluctuations. Empirical evidence suggests that while the pass-through is incomplete in the euro area as well as in the U.S.A., it appears to be higher in the U.S.A. This is especially true for the long-run pass-through. Research in this field suggests that a limited pass-through alters the Taylor Principle. In the case of a perfect pass-through, the Taylor Principle requires that policy rates increase by more than one-to-one with an increase in (expected) inflation. If the pass-through is incomplete, policy rates have to respond by even more to compensate for the smoothing of retail rates. However, the monetary policies currently implemented in the euro area and the U.S.A. seem to satisfy the conditions for a unique and stable equilibrium and thus avoid sunspot shocks. Furthermore, findings in the literature also show that a limited passthrough has implications for the stabilizing role of monetary policy and therefore, fluctuations arising from fundamental shocks. Classification-JEL: E32, E44, E52 Keywords: Interest rate pass-through, Financial systems, Stability Pages: 26–36 Year: 2006 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:cbb0f25d-47f8-43a4-98ba-ad8054467374/mop_2006_4_02_tcm16-52023.pdf File-Format: application/pdf File-Size: 245 kb Handle: RePEc:onb:oenbmp:y:2006:i:4:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Ernest Gnan Author-Name-First: Ernest Author-Name-Last: Gnan Author-Email: ernest.gnan@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7400 Author-Name: Maria Teresa Valderrama Author-Name-First: Maria Teresa Author-Name-Last: Valderrama Author-Email: maria.valderrama@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Title: Globalization, Inflation and Monetary Policy Abstract: Following up on Glatzer, Gnan and Valderrama (2006), we investigate two further channels through which globalization may have dampened inflation in the euro area: first, changed incentives for policymakers; second, global demand and supply conditions. Our empirical evidence shows that the domestic output gap seems to have lost its influence on inflation in the euro area; however, we cannot confirm that euro area inflation is instead significantly influenced by the global output gap. Therefore and because of daunting measurement problems, we caution against attaching undue weight to global output gap developments in central banks’ reaction functions. The flattening of the euro area Phillips curve – together with weakened monetary policy control over inflation due to increasing global long-term interest links and heightened uncertainty for policymakers due to globalization – calls for the stabilization of inflation expectations as a primary goal for monetary policy. Central banks should not rely on the inflation-dampening effects of globalization to last indefinitely: Supply bottlenecks in energy and raw materials, a shift in emerging economies’ savings-investment balance, as well as protectionist pressure may put an end to these effects. Classification-JEL: E31, E50, F15 Keywords: Globalization, Inflation, Monetary policy Pages: 37–54 Year: 2006 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:3030216e-2f6b-4e34-b014-c0bb932fbbcf/mop_2006_4_03_tcm16-52024.pdf File-Format: application/pdf File-Size: 327 kb Handle: RePEc:onb:oenbmp:y:2006:i:4:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Fabio Rumler Author-Name-First: Fabio Author-Name-Last: Rumler Author-Email: fabio.rumler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Title: The New Keynesian Phillips Curve for Austria – An Extension for the Open Economy Abstract: Following the empirical breakdown of the traditional Phillips curve relationship, the baseline New Keynesian Phillips Curve (NKPC) theory was formulated in the 1990s. Unlike the traditional Phillips curve, it derives from a theoretical model that is based on microeconomic principles. It expresses current inflation as a function of expected future inflation, past inflation and a measure of firms’ marginal cost. The NKPC serves to estimate the model’s structural parameters that capture price-setting behavior in an economy. This study estimates the NKPC using Austrian data. As Austria is a fairly open economy and the NKPC was initially formulated for a closed economy, the theoretical model is extended to include open-economy aspects and is then estimated in various specifications. The extended NKPC proves to explain inflation developments in Austria since 1980 quite accurately. The estimation of the structural parameters shows that around 30% of all Austrian firms change their prices every quarter, indicating that overall, prices are constant for an average of roughly ten months. Moreover, between 30% and 50% of all firms follow a backward-looking rule of thumb in setting their prices. Compared to the other euro area countries, this price duration represents an average, whereas the degree of backwardlooking behavior in price setting is above average. However, the NKPC is not found to be as suitable for forecasting purposes as time-series models, as none of the inflation forecasts based on the NKPC model was able to outperform a naive forecast (unchanged inflation rate over the forecast horizon). Classification-JEL: E31, C22, E12 Keywords: New Keynesian Phillips Curve, Inflation dynamics, GMM, Inflation forecasting Pages: 55–69 Year: 2006 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:3b93887c-f4f6-4393-8109-2386fc1815b3/mop_2006_4_04_tcm16-52025.pdf File-Format: application/pdf File-Size: 324 kb Handle: RePEc:onb:oenbmp:y:2006:i:4:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Walpurga Köhler-Töglhofer Author-Name-First: Walpurga Author-Name-Last: Köhler-Töglhofer Author-Email: walpurga.koehler-toeglhofer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Christa Magerl Author-Name-First: Christa Author-Name-Last: Magerl Author-Email: christa.magerl@wifo.ac.at Author-Workplace-Name: Austrian Institute of Economic Research Author-Name: Peter Mooslechner Author-Name-First: Peter Author-Name-Last: Mooslechner Author-Email: peter.mooslechner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Revised and New Competitiveness Indicators for Austria Reflect Improvement Trend since EMU Accession Abstract: Maintaining and improving competitiveness is one key goal of economic policy. In the short run, it is primarily price and cost developments as well as exchange rate changes that have the biggest impact on the development of an economy’s competitiveness. The competitiveness of Austrian manufacturing exporters has continued to augment since the country’s entry into Economic and Monetary Union (EMU) – this has been confirmed by the 2006 revision of the price competitiveness indicator for Austria (deflated by the (Harmonised) Index of Consumer Prices – HICP/CPI) and even more so by the new cost competitiveness indicator (deflated by relative unit labor costs) launched in this context. The marked improvement of the cost competitiveness indicator in recent years reflects moderate wage policies coupled with comparatively solid productivity growth in the Austrian manufacturing sector. The lower gain measured by the price competitiveness indicator may be linked to the fact that the HICP/CPI was broadly driven by oil price developments in 2004 and 2005, which masked the favorable unit labor cost developments in the manufacturing industry. Contrary to the development in the manufacturing sector, the price competitiveness in Austria’s travel and tourism sector has deteriorated somewhat: Even though price developments in Austria were more favorable than in the competition markets, they did not wholly offset losses in competitiveness related to exchange rate developments. Classification-JEL: F3, F4 Keywords: Effective exchange rates, Price and cost competitiveness, Manufacturing and service sector Pages: 70–97 Year: 2006 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:b198ad0d-b775-4a4b-850c-57a004a5a493/mop_2006_4_05_tcm16-52026.pdf File-Format: application/pdf File-Size: 574 kb Handle: RePEc:onb:oenbmp:y:2006:i:4:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Herbert Gratz Author-Name-First: Herbert Author-Name-Last: Gratz Author-Email: herbert.Gratz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Harald Grech Author-Name-First: Harald Author-Name-Last: Grech Author-Email: harald.grech@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.suerf.com/Hochreiter/ Author-Workplace-Phone: +43-1-40420-7213 Author-Workplace-Fax: +43-1-40420-7299 Title: Reforming the International Monetary Fund – Some Reflections Abstract: This paper reviews the most recent issues in the ongoing debate on the reform of the International Monetary Fund (IMF). The Fund has recognized that IMF surveillance should put greater weight on analyzing and discussing global economic issues. By taking account of international spillovers, surveillance should in future be multilateral rather than purely country-specific. Exchange rates and policies should also be the focus of renewed interest. Moreover, there is no doubt that IMF quotas will have to be adjusted to take account of the changing economic weight of many IMF member countries in the world economy. Negotiations on a new quota formula started after the Annual Meeting in Singapore in September 2006. The influence of low income countries should be strengthened by increasing the number of basic votes in order to prevent the Fund from loosing legitimacy. However, with the IMF’s intention to put more weight on GDP in the new quota formula, the stage is set for complex, difficult and time-consuming negotiations. Finally, the IMF will need to reform its financing system and budgeting procedures to ensure that expenditures will be adequately curtailed to enable it to work efficiently despite income shortfalls, which might well be not transitory but of a permanent nature. Classification-JEL: F33, F42, F53 Keywords: IMF, Representation, Constituencies, Governance, Surveillance Pages: 98–118 Year: 2006 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:e31fb57b-f2cf-45a5-83ec-82bcc9101ebb/mop_2006_4_06_tcm16-52027.pdf File-Format: application/pdf File-Size: 224 kb Handle: RePEc:onb:oenbmp:y:2006:i:4:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Wolfgang Pointner Author-Name-First: Wolfgang Author-Name-Last: Pointner Author-Email: wolfgang.pointner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Author-Name: Josef Schreiner Author-Name-First: Josef Author-Name-Last: Schreiner Author-Email: josef.schreiner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Euro Area Economy Gains Strength Abstract: The world economy continues to expand, albeit at a slightly more subdued pace. In the U.S.A., the growth deceleration was primarily attributable to lower investment and weaker consumer spending. In response to these developments, the Federal Reserve kept the key interest rate steady in August 2006, after raising it 17 consecutive times over the past two years. In Japan, the economic recovery gathered enough steam for the Bank of Japan to hike interest rates in July for the first time in six years. China’s and Southeast Asia’s high growth rates remained broadly unchanged; inflationary pressures have increased in several countries of the region, above all because of the high oil price. The euro area economy continued to recover, with GDP growth exceeding expectations in the second quarter of 2006. Recent forecasts suggest that growth – which was carried primarily by domestic demand – will exceed potential growth in 2006, and unemployment is expected to decline markedly. Even though the short-term outlook for price stability has deteriorated owing to an increase in indirect taxes in Germany, the upward pressure on consumer prices may be expected to ease, as the oil price has decreased significantly since mid-August after triggering a rise in inflation. Classification-JEL: E200, E300, O100 Keywords: Economic developments, Global outlook, Euro area, Central and (South-)Eastern Europe, Austria Pages: 6–23 Year: 2006 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:8cf54b28-9f5f-498c-abed-e815cb77b89e/mop_2006_3_konjunktur_tcm16-48470.pdf File-Format: application/pdf File-Size: 344 kb Handle: RePEc:onb:oenbmp:y:2006:i:3:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Ernst Glatzer Author-Name-First: Ernst Author-Name-Last: Glatzer Author-Email: ernst.glatzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at Author-Name: Ernest Gnan Author-Name-First: Ernest Author-Name-Last: Gnan Author-Email: ernest.gnan@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7400 Author-Name: Maria Teresa Valderrama Author-Name-First: Maria Teresa Author-Name-Last: Valderrama Author-Email: maria.valderrama@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Title: Globalization, Import Prices and Producer Prices in Austria Abstract: The growing theoretical and empirical literature suggests that globalization may have reduced inflation, particularly in high-income countries. Austria’s integration in the world economy has made a quantum leap over the past decade. Has this development dampened inflation in Austria? This paper first offers a broad overview of six channels through which one could expect globalization to reduce inflation. Then, two specific channels are investigated empirically for Austria. First, the effects from the increasing share of imports from low-cost countries on import prices are estimated. It is found that overall import prices were slightly dampened by the rising, and meanwhile substantial, share of imports from the new EU Member States. By contrast, China and other emerging economies play a negligible role for Austrian import price developments. Second, the effect of global competition on producer prices in Austria is studied. It is found that globalization has moderately dampened relative producer prices in the Austrian manufacturing sector, while increases in labor productivity had a larger effect. A rationale for the rather modest globalization effects on import and producer price inflation in Austria is that the country’s foreign trade and FDI links are still – despite the surge of links with central and eastern European countries – mainly with other high-income European countries.: Classification-JEL: E31, E50, F15 Keywords: Globalization indicators, Import and producer prices, Inflation, Austria Pages: 24–43 Year: 2006 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:440ce8af-87e2-449d-a3b6-1db6534ad407/mop_2006_3_glatzer_tcm16-48469.pdf File-Format: application/pdf File-Size: 301 kb Handle: RePEc:onb:oenbmp:y:2006:i:3:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Wolfgang Pointner Author-Name-First: Wolfgang Author-Name-Last: Pointner Author-Email: wolfgang.pointner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Employment Protection Regulations and Their Impact on Employment Abstract: Employment protection legislation (EPL) forms part of the institutional framework governing labor market allocation processes. It increases the costs enterprises incur when terminating contracts, either directly via severance payments or indirectly via procedural costs (e.g. notice periods or court trials). EPL is often considered to be the main reason for the high unemployment level in several euro area countries. While the empirical evidence for this correlation is generally rather weak, more robust results are found for its adverse impact on the employment opportunities of certain sociodemographic groups – especially women and the young. Another means to reduce the income risk associated with job loss are unemployment insurance benefits, which – contrary to employment protection – do not affect the employment opportunities of specific sociodemographic groups. An analysis of the effects of EPL on employment certainly needs to take into consideration other labor market institutions, too, as they are often highly correlated and their effects interact. Insofar as employment protection not only stabilizes the protected employees’ income, but also serves as an incentive to acquire firm-specific human capital, a certain degree of employment protection can also contribute to gross domestic product (GDP) growth. Classification-JEL: J08, J65 Keywords: Employment protection, Severance pay, Flexicurity Pages: 44–57 Year: 2006 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:21842d59-17fe-4c55-a837-b06a7092ccfa/mop_2006_3_pointner_tcm16-48471.pdf File-Format: application/pdf File-Size: 179 kb Handle: RePEc:onb:oenbmp:y:2006:i:3:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Alfred Stiglbauer Author-Name-First: Alfred Author-Name-Last: Stiglbauer Author-Email: alfred.stiglbauer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7435 Title: The (New) OECD Jobs Study: Introduction and Assessment Abstract: In 1994, the OECD presented the Jobs Study analyzing the causes of high unemployment in Europe. The study identified inappropriate labor market regulations and legislation as a key determinant of high unemployment. The OECD recommended deregulation and liberalization of labor market institutions as a remedy. Meanwhile, new empirical research has explored the influence of labor market institutions on unemployment and has only partly confirmed the recommendations of the Jobs Study. In a reevaluation, the OECD now concludes that different combinations of institutions may foster good labor market performance. Like the Scandinavian countries, Austria is a country with strong labor market institutions and low unemployment. Classification-JEL: E24, J50, J60 Keywords: Jobs study, Unemployment, Labor market institutions, Labor market regulation Pages: 58–74 Year: 2006 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:c7ce5e1d-0f44-42ef-8b7b-19e5f63f7d0e/mop_2006_3_stiglbauer_tcm16-48472.pdf File-Format: application/pdf File-Size: 225 kb Handle: RePEc:onb:oenbmp:y:2006:i:3:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Helmut Stix Author-Name-First: Helmut Author-Name-Last: Stix Author-Email: helmut.stix@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43(1)404-20-7211 Author-Workplace-Fax: +43(1)404-20-7299 Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: How Do Austrians Pay for Online Purchases? Abstract: The Internet has become an integral part of everyday life for many people: More than 60% of Austrians have access to the World Wide Web at their workplace or at home. The rapidly growing possibilities to access and use the Internet have also given rise to new forms of payment specifically designed for goods and services ordered online. Against this background, this study presents the results of a survey commissioned by the Oesterreichische Nationalbank on the payment methods Austrians choose when shopping on the Internet. The results showed that the vast majority of online payments (52%) are made via bankbased payment services (payment slips, preauthorized debit, etc.). Credit cards are used for 30% of transactions, and payment by COD (cash on delivery) accounts for a share of 13%. This study compares and complements these findings with the results of other surveys and also looks into the reasons respondents cited in favor of or against online shopping. Classification-JEL: E58, D12, O33 Keywords: E-money, E-commerce, Online payment means, Monetary policy Pages: 45–90 Year: 2006 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:d6182b12-7636-47bb-aef3-93dd8d1ecba8/mop_2006_3_stix_wagner_tcm16-48473.pdf File-Format: application/pdf File-Size: 198 kb Handle: RePEc:onb:oenbmp:y:2006:i:3:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Ragacs Author-Name-First: Christian Author-Name-Last: Ragacs Author-Email: christian.ragacs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Johann Scharler Author-Name-First: Johann Author-Name-Last: Scharler Author-Email: scharler@sfu.ca Author-Workplace-Name: Simon Fraser University, Department of Economics, 8888 University Drive, Burnaby, B.C., Canada V5A 1S6 Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: (+43-0) 732-2468-8360 Author-Workplace-Fax: (+43-0) 732-2468-9679 Title: Domestic Demand and Strong Exports Stimulate the Economy Abstract: According to the June 2006 economic outlook of the Oesterreichische Nationalbank (OeNB), Austria’s real gross domestic product (GDP) is expected to grow 2.5% in 2006 and 2.2% in both 2007 and 2008. The OeNB’s growth forecast for 2006 has been revised upward by 0.2 percentage point since the December outlook. Inflation will drop to 1.7% in 2006 (2005: 2.1%) and will fall further to 1.6% in 2007 and 2008. Employment will continue to increase substantially, but so will the labor supply. As a result, the unemployment rate will dip only slightly, to 5.1%. Keywords: Economic Forecast, Austria. Pages: 6–23 Year: 2006 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:1f27b13c-2db4-410a-a1fe-36730c77baff/mop_2006_2_01_tcm16-45580.pdf File-Format: application/pdf File-Size: 189 kb Handle: RePEc:onb:oenbmp:y:2006:i:2:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Is Germany’s Influence on Austria Waning? Abstract: This study analyzes the connection between business cycle fluctuations in Germany and Austria as well as the transmission of German shocks to Austria. Compared to Austria’s links with other countries, the ties between Austria and Germany have loosened in relative terms in recent years; in terms of gross domestic product (GDP), however, a strong and steady increase has been recorded. Static and dynamic correlation measures point to a consistently high level of co-movement between Austria and Germany. While the Austrian economy lagged behind the German economy by one quarter in the 1970s, it now leads the German economy by one quarter. The Austrian economy’s reaction to German shocks equals 0.4 times the German reaction. Monetary policy shocks are transmitted with the greatest impact, while supply and demand shocks trigger a far less pronounced reaction in Austria. Over time, monetary policy shocks have gained slightly in importance, while German demand shocks have become less important. On average across shocks, the transmission effect shows a marginal weakening. The relative importance of Germany and the international environment in explaining the forecast error for Austrian GDP has increased somewhat over time, whereas the domestic contribution to the forecast error has declined. On the whole, it is not possible to identify a decline in Germany’s importance for the Austrian economy. Classification-JEL: C32, E32, F41 Keywords: business-cycle, synchronization, vector autoregression, shock-identification, transmission. Pages: 24–45 Year: 2006 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:753533db-7d46-48d0-b619-7179e2dd239c/mop_2006_2_02_tcm16-45582.pdf File-Format: application/pdf File-Size: 245 kb Handle: RePEc:onb:oenbmp:y:2006:i:2:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Jürgen Janger Author-Name-First: Jürgen Author-Name-Last: Janger Author-Email: juergen.janger@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: The Lisbon National Reform Programs: New Ideas for Austria’s Economic Policy Abstract: Following the relaunch of the Lisbon Process, the EU Member States drew up their national reform programs (NRPs) in the second half of 2005. This paper starts by pinpointing potential new ideas for Austria’s economic policies and policymaking from a selection of other NRPs, with the aim of suggesting means how to further improve the quality of the Austrian NRP. The author then examines the question of whether the reform program in itself can increase the likelihood of actually transforming the measures announced in the NRP into tangible policies. The topics discussed include competition policy, education and further training, employment promotion measures, public sector reform, and support programs for small and medium-sized enterprises (SMEs). Austria’s economic policymaking may find stimulus in the forward-looking, cross-sectoral and goal-oriented political strategies and action plans of other countries, which also contain elements of monitoring and evaluation. The NRP’s prospects for success in improving the implementation of economic policies depend on whether or not it can become an effective commitment device for growth- and employment-oriented economic policy. Arguably, this will only be possible if a number of conditions are met: The NRP must achieve a higher profile in public consciousness and its signaling effect must be clarified through precise analyses of the influence on growth and employment engendered by the measures set out in the program. Furthermore, the appointment of an official body (such as the European Commission or an independent research institute) to evaluate and report on the progress of each country would be of value. Classification-JEL: O10, O57 Keywords: economic policy, political economy of reform. Pages: 46–68 Year: 2006 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:4d671af3-8cef-48d8-9958-5b964c39f12e/mop_2006_2_03_tcm16-45584.pdf File-Format: application/pdf File-Size: 243 kb Handle: RePEc:onb:oenbmp:y:2006:i:2:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Markus Knell Author-Name-First: Markus Author-Name-Last: Knell Author-Email: markus.knell@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7218 Author-Workplace-Fax: +43-1-40420-7299 Author-Name: Walpurga Köhler-Töglhofer Author-Name-First: Walpurga Author-Name-Last: Köhler-Töglhofer Author-Email: walpurga.koehler-toeglhofer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Doris Prammer Author-Name-First: Doris Author-Name-Last: Prammer Author-Email: doris.prammer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: The Austrian Pension System – How Recent Reforms Have Changed Fiscal Sustainability and Pension Benefits Abstract: This article discusses the most recent pension reforms in Austria, which were mainly triggered by the need to alleviate the budgetary pressure stemming from the age structure of the Austrian population. Using synthetic indicators, derived from the government’s budget constraint, the paper assesses fiscal sustainability before and after the major pension reforms. Austria’s fiscal sustainability was clearly improved by the reforms. The two main factors behind this improvement are a projected increase in the average effective retirement age and a projected reduction in the generosity of the mandatory state pension system. Based on available data, the paper assesses the current and prospective level of Austrian public pension benefits and puts them into an international perspective. Classification-JEL: H55, H60, E62 Keywords: public pensions, social security, fiscal sustainability. Pages: 69–93 Year: 2006 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:b53c31d7-d1cf-4014-962a-534954b850a1/mop_2006_2_04_tcm16-45585.pdf File-Format: application/pdf File-Size: 269 kb Handle: RePEc:onb:oenbmp:y:2006:i:2:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Beer Author-Name-First: Christian Author-Name-Last: Beer Author-Email: chbeer@wu-wien.ac.at Author-Workplace-Name: Vienna University of Economics and Business Administration Author-Name: Peter Mooslechner Author-Name-First: Peter Author-Name-Last: Mooslechner Author-Email: peter.mooslechner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Martin Schürz Author-Name-First: Martin Author-Name-Last: Schürz Author-Email: martin.schuerz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Austrian Households’ Financial Wealth: An Analysis Based on Microeconomic Data Abstract: Microeconomic data on households are providing increasingly important information for many economic policy issues. This study presents the results of a survey conducted by the Oesterreichische Nationalbank on Austrian households’ financial wealth. The descriptive presentation of household financial wealth also covers data on household debt and investment. Household income is shown to have a significant influence on the level of financial assets. The results of logit estimates and a cluster analysis demonstrate the prominent role of net household income on investment decisions. By far the greatest volume of household financial assets is invested in savings deposits and in deposits made under building loan contracts, but 16% of all households also stated that they owned stocks. Classification-JEL: D14, D31, G11 Keywords: households’ wealth, portfolio choice, financial assets. Pages: 94–110 Year: 2006 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:a6251b55-e03e-4ec7-9aa4-d90bcdf64a6a/mop_2006_2_05_tcm16-45590.pdf File-Format: application/pdf File-Size: 224 kb Handle: RePEc:onb:oenbmp:y:2006:i:2:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Peter Mooslechner Author-Name-First: Peter Author-Name-Last: Mooslechner Author-Email: peter.mooslechner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Helmut Stix Author-Name-First: Helmut Author-Name-Last: Stix Author-Email: helmut.stix@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43(1)404-20-7211 Author-Workplace-Fax: +43(1)404-20-7299 Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: How Are Payments Made in Austria? Abstract: This study presents the results of a survey conducted in fall 2005 on the payment habits of Austrian households, comparing its findings with those of similar surveys carried out in 1996 and 2000. The focus is to analyze changes in the use of payment means over time and, on this basis, to assess future trends. As the analysis in the 2005 survey shows, cash continues to dominate the structure of payment transactions, remaining by far the most important means of payment. Cash payments account for 86% of all direct payment transactions by Austrian households and for 70% of the total payment value. Compared with the previous surveys, however, the share of cash has contracted noticeably whereas the share of payments at point-of-sale (POS) terminals (via debit card payments) has more than doubled in the last five years to 11.5%. Although credit card payments have posted a slight increase, their share in the total volume still remains very low (1.3%). Overall, the results indicate the continuation of cash-card substitution. From a central banking perspective, assessing future trends in cash demand is a key monetary policy issue. The findings of this study suggest that Austrian households’ payment habits will not change abruptly, therefore, any impact on monetary policy can be expected to remain very limited. Classification-JEL: E41, E58, D12 Keywords: usage of payment means, demand for money, monetary policy. Pages: 111–134 Year: 2006 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:38f15ff0-49c8-4479-a4e0-aebea49c55b6/mop_2006_2_06_tcm16-45592.pdf File-Format: application/pdf File-Size: 244 kb Handle: RePEc:onb:oenbmp:y:2006:i:2:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Beer Author-Name-First: Christian Author-Name-Last: Beer Author-Email: chbeer@wu-wien.ac.at Author-Workplace-Name: Vienna University of Economics and Business Administration Author-Name: Jürgen Janger Author-Name-First: Jürgen Author-Name-Last: Janger Author-Email: juergen.janger@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Alfred Stiglbauer Author-Name-First: Alfred Author-Name-Last: Stiglbauer Author-Email: alfred.stiglbauer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7435 Title: Strategies for Growth and Employment in Austria Abstract: On March 3, 2006, the Oesterreichische Nationalbank (OeNB) hosted a one-day workshop on “Strategies for Growth and Employment in Austria.” The workshop’s objective was to propose concrete measures for the promotion of growth and employment in Austria. In the introductory session, Andreas Wörgötter (OECD) spoke about growthpromoting reforms in Austria, while Jürgen Janger (OeNB) addressed the National Reform Programs under the Lisbon Strategy. Karl Aiginger (Austrian Institute of Economic Research – WIFO) commented on both presentations and outlined his views on growth policy. Michael Böheim (WIFO) suggested implementing a growth-oriented competition policy, particularly in the field of public utilities, in the service sector and in the liberal professions. Iain Paterson (Institute for Advanced Studies – IHS) pointed out that the liberal professions are highly regulated in Austria. Ludger Wößmann (ifo Institute for Economic Research) and David Audretsch (Max Planck Institute of Economics) emphasized the significance of the secondary and tertiary education systems for growth and employment. The final workshop session on maximizing employment potential included an overview of labor market developments in Austria by Helmut Hofer (IHS), a talk on how to increase female employment by Gudrun Biffl (WIFO) as well as a presentation on the employment of older workers by Alfred Stiglbauer (OeNB). Classification-JEL: E24, H50, O40 Keywords: growth policies, employment policies, competition policies, education, economic reforms Pages: 145–152 Year: 2006 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:3e5a699e-03d8-4cd7-8617-11a0b4a78363/mop_2006_2_08_tcm16-45594.pdf File-Format: application/pdf File-Size: 121 kb Handle: RePEc:onb:oenbmp:y:2006:i:2:b:7 Template-Type: ReDIF-Article 1.0 Author-Name: Andreas Breitenfellner Author-Name-First: Andreas Author-Name-Last: Breitenfellner Author-Email: andreas.breitenfellner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Thomas Reininger Author-Name-First: Thomas Author-Name-Last: Reininger Author-Email: Thomas.Reininger@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Foreign Research Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-5234 Author-Workplace-Fax: +43-1-40420-5299 Title: Economic Outlook Improves in Euro Area – Inflation Pressure Persists Due to High Energy Prices Abstract: The world economy is chugging along, but its key engines may be changing. While the economies of the U.S.A. and China have reached more mature levels, economic activity is now gradually gaining momentum in Europe and Japan. In Austria, economic growth over the year 2005 clearly regained momentum after a substantial but temporary slowdown in late 2004 and early 2005.Whereas previously economic growth was mainly driven by exports, it is now increasingly supported by domestic demand, too. Already in the second half of 2005, Austrian businesses visibly stepped up their investment activities, while recovery in consumer spending has been more hesitant. According to the OeNB's economic indicator, growth in Austria's real GDP (seasonally adjusted, compared to the previous quarter) will jump to 0.8% in both the first and second quarters of 2006. Despite high energy prices, inflation has abated considerably, thus supporting the real purchasing power of households. Finally, employment has risen, but the rate of unemployment remains elevated nonetheless. Classification-JEL: E200, E300, O100 Keywords: economic developments, global outlook, euro area, central and (south-)eastern Europe, Austria Pages: 6–23 Year: 2006 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:5b3bdc4b-37f2-49a0-b30a-2a8fa879064e/mop_2006_q1_analyses01_tcm16-42102.pdf File-Format: application/pdf File-Size: 209 kb Handle: RePEc:onb:oenbmp:y:2006:i:1:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Jürgen Janger Author-Name-First: Jürgen Author-Name-Last: Janger Author-Email: juergen.janger@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Johann Scharler Author-Name-First: Johann Author-Name-Last: Scharler Author-Email: johann.scharler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: (+43-0) 732-2468-8360 Author-Workplace-Fax: (+43-0) 732-2468-9679 Author-Name: Alfred Stiglbauer Author-Name-First: Alfred Author-Name-Last: Stiglbauer Author-Email: alfred.stiglbauer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7435 Title: The Potential Growth Prospects of the Austrian Economy — Methods and Determinants Abstract: In this paper we discuss issues related to the longer-run growth prospects of the Austrian economy. We briefly survey methods commonly applied to estimate the growth potential of an economy. According to currently available estimates, the growth rate of Austrian potential output is roughly 2%.We observe that potential growth has slowed down slightly over the past two decades. Turning to prospects for total factor productivity growth, there have been significant improvements over the last ten years with respect to R&D and trade openness. The impact of dynamic agglomeration gains also depends on the transport infrastructure. Product market competition and entry have markedly improved. Austria still has deficits in the areas of higher education and venture capital. By and large, most indicators — at least their growth rates — point towards good prospects for total factor productivity (TFP) growth. As regards labor supply, we show that demographic projections point to a slowdown in the growth of the working-age population, which in turn may lead to declining growth rates of actual and potential output. Such results are often achieved by using growth equations. This approach probably overestimates the negative effect on total GDP growth. The slowdown of labor supply growth can be mitigated by increasing participation rates. Austria has undertaken significant steps to increase the labor market participation of older workers by a series of pension reforms. After a decline in 2002 labor force growth has been rising steadily since 2003. Moreover, female labor supply has been increasing considerably more strongly than male labor supply. Classification-JEL: E0, J0 Keywords: potential growth, TFP, labor market. Pages: 24–52 Year: 2006 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:0a9756d2-3a88-4b47-bf8b-7fcb4ca4f6f7/mop_2006_q1_analyses02_tcm16-42103.pdf File-Format: application/pdf File-Size: 248 kb Handle: RePEc:onb:oenbmp:y:2006:i:1:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Markus Arpa Author-Name-First: Markus Author-Name-Last: Arpa Author-Email: markus.arpa@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at Author-Name: Jesus Crespo Cuaresma Author-Name-First: Jesus Crespo Author-Name-Last: Cuaresma Author-Email: jesus.cuaresma@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Ernest Gnan Author-Name-First: Ernest Author-Name-Last: Gnan Author-Email: ernest.gnan@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7400 Author-Name: Maria Antoinette Silgoner Author-Name-First: Maria Antoinette Author-Name-Last: Silgoner Author-Email: Maria.Silgoner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Oil Price Shock, Energy Prices and Inflation – A Comparison of Austria and the EU Abstract: The marked increase in the price of crude oil has also affected the prices of motor fuels, heating oil and other forms of energy. The extent and speed of these price reactions have varied widely in EU countries, and the accompanying inflationary effects have differed accordingly. For monetary and economic policy, it is important to know the channels through which oil price fluctuations are transmitted in order to assess their effects on inflation, economic growth and employment. This study presents a current overviewof oil and primary energy markets worldwide and estimates the elasticities and the speed of adjustment parameters of motor fuel and heating oil prices in response to oil price fluctuations in the EU-25. In addition, we test whether prices react asymmetrically to increases and decreases in crude oil prices and examine their transmission to other forms of energy, such as natural gas, electricity, solid fuels and district heating.We highlight the effect of volume-based excise taxes, which have a strong differentiating as well as dampening effect on prices, and address the issue of whether fiscal policy should cushion the impact of price increases, for example by lowering energy taxes or by providing energy subsidies. Then we quantify the direct inflationary effects of an oil price shock in Austria in a simple simulation using the OeNB's inflation forecasting model. Finally, we derive conclusions for monetary and economic policy. Classification-JEL: E31, E52, E62, Q43 Keywords: energy prices, energy markets, inflation, monetary policy. Pages: 53–77 Year: 2006 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:72391036-5c50-48bd-adfa-479672d638e1/mop_2006_q1_analyses03_tcm16-42104.pdf File-Format: application/pdf File-Size: 250 kb Handle: RePEc:onb:oenbmp:y:2006:i:1:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Leopold Diebalek Author-Name-First: Leopold Author-Name-Last: Diebalek Author-Email: leopold.diebalek@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at/ Author-Workplace-Phone: +43(1)404-20-7413 Author-Workplace-Fax: +43(1)404-20-7499 Author-Name: Walpurga Köhler-Töglhofer Author-Name-First: Walpurga Author-Name-Last: Köhler-Töglhofer Author-Email: walpurga.koehler-toeglhofer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Doris Prammer Author-Name-First: Doris Author-Name-Last: Prammer Author-Email: doris.prammer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Reform of the Stability and Growth Pact Abstract: The objective of the Stability and Growth Pact is to secure sound fiscal policies, which have remained a national responsibility in Economic and Monetary Union. Ever since it first took effect, the Stability and Growth Pact had been subject to a reform debate, ultimately leading to its redesign in 2005. The debate intensified in 2002, when several European countries suffered from growing budgetary problems, and culminated in November 2003, when the Ecofin Council decided not to act upon European Commission recommendations to move to the next steps of the excessive deficit procedure for France and Germany and instead adopted conclusions putting the procedures in abeyance subject to certain undertakings by the countries concerned. Consequently, the Commission brought an action before the European Court of Justice. The conflict surrounding the correct procedure in line with the provisions of the Treaty establishing the European Community (the Treaty) and the Stability and Growth Pact, i.e. the correct interpretation and implementation of the procedural and factual steps laid down therein, brought to light differences of opinion between the EU Member States and the European Commission as well as among the Member States themselves. Against this background, the European Commission presented concrete proposals to reform the Stability and Growth Pact in the fall of 2004. At an extraordinary Ecofin meeting on March 20, 2005, the EU finance ministers reached a compromise on the reform of the Stability and Growth Pact. The reform includes measures applicable to both the preventive and the corrective arms of the Stability and Growth Pact. The top priority of the reform was to enhance Member States' national ownership of the fiscal framework and hence to safeguard the sustainability of public finances in the Economic and Monetary Union in the long run. Experience to date does not allow for a final assessment, but from the vantage point of monetary policy, certain weaknesses remain that had already been pointed out during the reform debate. Classification-JEL: E61, H3, H6 Keywords: fiscal policy, fiscal rules, stability and growth pact reform, european monetary union. Pages: 78–109 Year: 2006 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:cc820c95-6cb7-40bb-a69d-8ae8f4a7aa63/mop_2006_q1_analyses04_tcm16-42105.pdf File-Format: application/pdf File-Size: 252 kb Handle: RePEc:onb:oenbmp:y:2006:i:1:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Andreas Breitenfellner Author-Name-First: Andreas Author-Name-Last: Breitenfellner Author-Email: andreas.breitenfellner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Antje Hildebrandt Author-Name-First: Antje Author-Name-Last: Hildebrandt Author-Email: antje.hildebrandt@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Foreign Research Division Author-Workplace-Homepage: http://www.oenb.at Title: High Employment with Low Productivity? The Service Sector as a Determinant of Economic Development Abstract: Whether measured in terms of employment or value added, the service sector by far dominates the economies of industrialized countries. The positive connection between tertiarization and per capita income is confirmed in both country cross-section and time series analyses. This development can be explained by demand factors (e.g. the growing proportion of female employees) and supply factors (e.g. cost disease in the service sector). This paper analyzes data on 23 service activities, grouped into four subsectors (distribution, business, social and personal services). The analysis of each subsector's contribution to the development of employment and productivity between 1983 and 2003 illuminates the prevailing productivity gap between the EU-15 and the U.S.A. The corresponding investigation of four new EU Member States during their transformation processes points to an employment potential in the tertiary sector that has not yet been fully utilized. The study further identifies four tertiarization models (dynamic, lagging, managed and catching-up) that can be associated with different geographic regions. The process of tertiarization is compatible with growth in both employment and productivity. Different combinations of production- and consumption-oriented services can have a positive effect on growth. The concluding section discusses the role of the European Union's Lisbon strategy in enhancing the productivity of the service sector. Classification-JEL: O14, O52, O57, F15, L80, P20 Keywords: sectoral change, productivity, country comparison in the EU. Pages: 110–135 Year: 2006 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:682c7ea7-1a74-462f-af94-0000a83005dd/mop_2006_q1_analyses05_tcm16-42106.pdf File-Format: application/pdf File-Size: 237 kb Handle: RePEc:onb:oenbmp:y:2006:i:1:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Friedrich Fritzer Author-Name-First: Friedrich Author-Name-Last: Fritzer Author-Email: friedrich.fritzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7417 Title: The Financial System and the Institutional Environment as Determinants of Economic Performance: Austria in Comparison Abstract: Empirical studies suggest that the Austrian economy would benefit considerably from a further integration of financial systems (Guiso et al., 2004). Against this background, this paper highlights selected aspects of the Austrian economy's financial structure and institutional environment in a cross-country comparison and evaluates the extent to which these factors are conducive to economic performance. Compared with the U.S.A. or the United Kingdom, the ownership structure of listed companies is highly concentrated in Austria and in many other euro area countries. In fact, the Austrian stock market stands out in terms of its high ownership concentration. However, empirical evidence indicates that an all too high level of ownership concentration has a negative impact on firm performance (see, for example, Gugler, 1999). Fostering investor protection is a natural lever to promote a higher degree of dispersion and hence a lower level of concentration. Although the standards of investor protection in Austria have improved substantially in recent years, they still need to be safeguarded and strengthened where necessary. Another important issue in this context is the development of venture capital markets which are key to innovation and hence to productivity. It is no coincidence that the most liquid venture capital markets are found in countries with the most developed stockexchanges — e.g. the U.S.A., the United Kingdom and the Netherlands. The Austrian venture capital market is one of the smallest by international standards. In order to promote venture capital in Austria, the local stock market, which provides exit opportunities for venture capitalists, needs to be deepened. According to several indicators (which were originally developed by Barth et al. (2004) — supervisory power, supervisory independence and private monitoring — and updated for the present purpose), the Austrian regulatory and supervisory framework seems to be fairly well designed to foster efficiency and stability in the banking sector: (1) Austria seems to be among those countries which grant a fairly high degree of power to the supervisory authority. (2) The supervisory power is complemented by adequate mechanisms to foster the reporting of reliable, comprehensive and timely information (private monitoring). (3) In comparison with other countries, the Austrian supervisory authority is quite independent from political interference and influences from the banking industry (supervisory independence). Classification-JEL: G28, K22, O4 Keywords: financial systems, corporate governance, banking sector regulation. Pages: 136–158 Year: 2006 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:5df8eb53-6411-4c99-8a28-6c29a8d6f40a/mop_2006_q1_analyses06_tcm16-42109.pdf File-Format: application/pdf File-Size: 217 kb Handle: RePEc:onb:oenbmp:y:2006:i:1:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Claudia Kwapil Author-Name-First: Claudia Author-Name-Last: Kwapil Author-Email: claudia.kwapil@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: (+43-1) 404 20-7415 Author-Workplace-Fax: (+43-1) 404 20-7499 Author-Name: Fabio Rumler Author-Name-First: Fabio Author-Name-Last: Rumler Author-Email: fabio.rumler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Title: Price Setting and Inflation Persistence in Austria Abstract: On December 15, 2005, the Oesterreichische Nationalbank (OeNB) held a workshop on “Price Setting and Inflation Persistence in Austria.” The aim of this workshop was to discuss the OeNB's recent research results in the field of price dynamics and inflation1 with policymakers and the scientific community. The papers presented at the workshop analyzed the price formation process and the determinants of inflation persistence in Austria from different perspectives and on the basis of various data sources. The first session addressed the degree and determinants of price rigidities at the micro level. Session 2 provided an analysis of inflation persistence in Austria at the aggregate and sector levels, while session 3 dealt with Austrian consumers' inflation perceptions. A policy panel discussion concluded the workshop. Classification-JEL: D40, E31 Keywords: price rigidity, price setting, price perception. Pages: 160–164 Year: 2006 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:bc7afa0f-664f-47fc-b7a1-7bec1ef1403f/mop_2006_q1_highlights01_tcm16-42112.pdf File-Format: application/pdf File-Size: 80 kb Handle: RePEc:onb:oenbmp:y:2006:i:1:b:7 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: High Price Competitiveness of Austrian Exporters and Recovery of Private Consumption Support Economic Activity-Economic Outlook for Austria from 2005 to 2007 (December 2005) Abstract: According to the December 2005 economic outlook of the Oesterreichische Nationalbank (OeNB), Austria's real gross domestic product (GDP) is projected to increase by 1.9% in 2005. Economic growth is then expected to accelerate to 2.3% in 2006 and in 2007. Inflation according to the Harmonised Index of Consumer Prices (HICP) will quicken temporarily to 2.2%in 2005 as a result of the rise in the price of oil and services and then moderate to 1.9% in 2006 and further to 1.7% in 2007. Keywords: Forecast, Austria. Pages: 6–28 Year: 2005 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:2603170b-7dbc-48ca-99e8-de3c9eb925a5/mop_2005_q4_analysis_1_tcm16-38189.pdf File-Format: application/pdf File-Size: 408 kb Handle: RePEc:onb:oenbmp:y:2005:i:4:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Ernest Gnan Author-Name-First: Ernest Author-Name-Last: Gnan Author-Email: ernest.gnan@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7400 Author-Name: Doris Ritzberger-Grünwald Author-Name-First: Doris Author-Name-Last: Ritzberger-Grünwald Author-Email: doris.ritzberger-gruenwald@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-5201 Author-Workplace-Fax: +43-1-40420-5299 Title: The Natural Rate of Interest — Concepts and Appraisal for the Euro Area Abstract: Real interest rates in the euro area fluctuated sharply between —4.2% and +7.7% over the past half century. A key question for monetary policy makers and economic agents is: What is the „neutral,” „equilibrium” or „natural” real interest rate to which current rates might eventually move back? In the long run, the natural rate of interest is influenced by productivity developments, population growth and the time preference for consumption over saving. In the medium run, the natural rate may also be influenced by fiscal policy, the structure of financial markets, and inflation risk premiums. Globalization should over time contribute to an international convergence of natural rates. Empirical estimates of the natural rate differ considerably and are associated with large error margins; estimates in „real time” suffer from additional uncertainty. Monetary policy rules based on the natural rate (e.g. Taylor rules, real interest rate gap) should thus be treated with great caution. Monetary policy might use the natural rate to consider appropriate responses to technological and demographic shocks. The majority of recent estimates for the euro area points to a fall in the natural rate to a level as low as 1.5%. This may reflect a more credible monetary policy and deep euro area financial markets, but also slowing productivity growth and a decline in the working-age population. In the future, the growing need for private savings for retirement might lower the natural rate, whereas „fiscal consolidation fatigue” might raise the natural rate. Classification-JEL: E43, E52, C32 Keywords: interest rates, monetary policy, monetary policy rules. Pages: 19–47 Year: 2005 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:3a4d48d8-a379-489a-8253-1c8f67215e26/mop_2005_q4_analysis_2_tcm16-38190.pdf File-Format: application/pdf File-Size: 413 kb Handle: RePEc:onb:oenbmp:y:2005:i:4:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Claudia Kwapil Author-Name-First: Claudia Author-Name-Last: Kwapil Author-Email: claudia.kwapil@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: (+43-1) 404 20-7415 Author-Workplace-Fax: (+43-1) 404 20-7499 Author-Name: Fabio Rumler Author-Name-First: Fabio Author-Name-Last: Rumler Author-Email: fabio.rumler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Title: Price Setting in Austria — Results from the Eurosystem Inflation Persistence Network Abstract: This study examines price setting in Austria using micro observations of Consumer Price Index (CPI) data on the one hand and a one-time survey on firms' price-setting practices on the other hand. The analysis of the micro CPI data shows that consumer prices are adjusted roughly once a year averaged over all items in the CPI. However, there are enormous differences across sectors: The prices of energy products and unprocessed food are adjusted most often whereas the prices of nonenergy industrial goods and of services are changed less frequently. Austria ranks roughly in the middle range among euro area countries in terms of the frequency of price changes; it does not stand out for either especially rigid or especially flexible prices. Judging from the data set analyzed, the euro cash changeover did not bring about a significant inflationary effect. The supplementary company survey revealed that (producer) prices are reviewed four times as often as they are actually adjusted — about once a year. Price rigidity evidently tends to arise more at the second level of price formation, namely at the actual price-setting level. Firms state implicit (long-term customer relationships) and explicit contracts as causes for delaying price adjustments. Classification-JEL: E31, L14 Keywords: inflation persistence, nominal rigidity, price-setting. Year: 2005 Issue: 4 Price: 48–60 File-URL: https://www.oenb.at/dam/jcr:71188edf-a3de-4941-905a-00da0be6023c/mop_2005_q4_analysis_3_tcm16-38191.pdf File-Format: application/pdf File-Size: 319 kb Handle: RePEc:onb:oenbmp:y:2005:i:4:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Bernhard Grossmann Author-Name-First: Bernhard Author-Name-Last: Grossmann Author-Email: bernhard.grossmann@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Doris Prammer Author-Name-First: Doris Author-Name-Last: Prammer Author-Email: doris.prammer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: A Disaggregated Approach to Analyzing Public Finances in Austria Abstract: The budget elasticities derived in this study indicate that a 1% deviation of GDP from the long-term growth potential causes a purely cyclical change of 0.38% of GDP in Austria's budget balance. The predominance of progressive income taxation in Austria is reflected in the estimated elasticity of direct taxes on households to average income of 1.3. We expected the elasticity of direct taxes on enterprises to gross operating surplus to come to 1, since the corporate income tax is a proportional tax; the computation result of 0.9 confirms our assumption. The elasticity of indirect taxes to private consumption of 0.97 documents both the high share of proportional taxes and the impact of specific taxes, while the elasticity values of social security contributions and pension insurance contributions to average income (0.99 and 1) reveal the close correlation of these budget categories with the macroeconomic base variable. The elasticity of unemployment benefits to the number of unemployed persons of 0.9 results from the rising average duration of unemployment. Between 2000 and 2004, the general government's structural budget balance (i.e. the budget balance adjusted for cyclical effects and one-off measures) improved from —2.1% to —0.9% of trend GDP. The development of the structural budget balance in Austria is above all shaped by discretionary measures based on legislative changes. The deviation of budget categories' development from the underlying tax base, which is especially pronounced for progressive taxes, and the deviation of the tax base from GDP are only of minor importance in the development of public finances in Austria. Classification-JEL: E6, H6, C50 Keywords: fiscal policy, budget elasticities, error correction model, cyclical adjustments. Pages: 61–75 Year: 2005 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:097f9429-b5dd-4e59-8c1c-c3fa0276f0a5/mop_2005_q4_analysis_4_tcm16-38192.pdf File-Format: application/pdf File-Size: 373 kb Handle: RePEc:onb:oenbmp:y:2005:i:4:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Paul Schmidt Author-Name-First: Paul Author-Name-Last: Schmidt Author-Email: paul.schmidt@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: The European Integration Process — A Changing Environment for National Central Banks Abstract: On October 21, 2005, the Oesterreichische Nationalbank (OeNB) held a high-level workshop labeled “The European Integration Process — A Changing Environment for National Central Banks” for an international audience. The workshop provided an overview of the changing role that national central banks (NCBs) play in Europe, with a focus on the institutional and legal challenges the individual NCBs face. Moreover, it provided a platform for exchanges among NCB representatives of countries currently undergoing different stages of European integration. Classification-JEL: F02, F15, F42 Keywords: european integration, national central banks. Pages: 78–81 Year: 2005 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:c52735b8-c7a1-4c57-9600-d6cf7c750977/mop_2005_q4_highlights_1_tcm16-38193.pdf File-Format: application/pdf File-Size: 186 kb Handle: RePEc:onb:oenbmp:y:2005:i:4:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Bernhard Grossmann Author-Name-First: Bernhard Author-Name-Last: Grossmann Author-Email: bernhard.grossmann@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Eva Hauth Author-Name-First: Eva Author-Name-Last: Hauth Author-Email: Eva.Hauth@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Silvia Pop Author-Name-First: Silvia Author-Name-Last: Pop Author-Email: Silvia.Pop@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Fiscal Spending Rules in Europe Abstract: A workshop on Fiscal Spending Rules hosted by the Austrian Government Debt Committee in cooperation with the Oesterreichische Nationalbank (OeNB) on September 29, 2005, explored two major issues: First, whether national fiscal rules that tie in with the EU fiscal framework can help sustain sound fiscal policies in Europe, and second, what aspects must be taken into consideration when designing such spending rules. Additionally, contributors presented two proposals for the implementation of fiscal spending rules in Austria. Classification-JEL: H50, H61, E6 Keywords: public finance, fiscal policy, fiscal rules. Pages: 82–88 Year: 2005 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:c6a64768-208e-4fb9-8d74-550ceca7965a/mop_2005_q4_highlights_2_tcm16-38194.pdf File-Format: application/pdf File-Size: 200 kb Handle: RePEc:onb:oenbmp:y:2005:i:4:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Antje Hildebrandt Author-Name-First: Antje Author-Name-Last: Hildebrandt Author-Email: antje.hildebrandt@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Foreign Research Division Author-Workplace-Homepage: http://www.oenb.at Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Author-Name: Maria Antoinette Silgoner Author-Name-First: Maria Antoinette Author-Name-Last: Silgoner Author-Email: Maria.Silgoner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Economic Momentum Slows in the Euro Area – Energy Price Developments Have a Negative Impact Abstract: The U.S. economy continued to expand in the first half of 2005 despite the strong impact of a further rise in oil prices. However, according to OECD estimates, Hurricane Katrina will dampen economic growth by 0.5 percentage point to 3.1% for the whole year 2005. The Japanese economy remained on its growth path in the second quarter of 2005. The other Asian economies — especially dynamic China — also expanded further. Conversely, GDP growth in the euro area slowed down in the second quarter of 2005. Hit by energy price increases, private consumption generated a marginally negative contribution to growth, while foreign trade and investment made only small positive contributions to growth. Whereas the leading indicators had sent out positive signals since May, these signals recently reversed, so that the outlook for the second half of 2005 deteriorated. Once again, energy price developments are the main culprit; they are also the reason for the persistently high level of inflation. Growth in most of the Central European new Member States (NMS) as well as the EU candidate countries slowed in the first quarter of 2005 compared to the full year 2004. Only in Bulgaria and in the Czech Republic did GDP growth accelerate somewhat. In the second quarter of 2005, economic activity picked up in all Central European NMS save Slovakia, where it remained stable at a high level. After the upward pressure on prices experienced in 2004 — largely as a consequence of EU accession — 2005 is marked by positive base effects, which have helped slow down inflation in the NMS. The Austrian economy, which had enjoyed robust export-driven growth in 2004, lost momentum in the first quarter of 2005 but regained speed in the second quarter. The OeNB's short-term economic indicator points to 1.8% real GDP growth for the full year 2005, which corresponds to a downward revision by 0.2 percentage point compared with the forecast that the OeNB published in June. Despite elevated energy prices, inflation has been going down in 2005 so far. The unemployment rate (Eurostat definition) augmented to 5.1% in July 2005 even though employment surged. Classification-JEL: E200, E300, O100 Keywords: economic developments, Austria. Pages: 6–21 Year: 2005 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:98a9b9f6-777e-43f1-8a83-9b4e5ab48c0a/mop_2005_q3_analysis1_tcm16-34756.pdf File-Format: application/pdf File-Size: 192 kb Handle: RePEc:onb:oenbmp:y:2005:i:3:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Manfred Fluch Author-Name-First: Manfred Author-Name-Last: Fluch Author-Email: manfred.fluch@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Communications, Planning and Human Resources Department Author-Name: Helmut Stix Author-Name-First: Helmut Author-Name-Last: Stix Author-Email: helmut.stix@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43(1)404-20-7211 Author-Workplace-Fax: +43(1)404-20-7299 Title: Perceived Inflation in Austria – Extent, Explanations, Effects Abstract: In the euro area countries, the euro cash changeover was accompanied by the development of a significant gap between actual inflation — as measured by the Harmonised Index of Consumer Prices (HICP) — and the inflation perceived by the general public; in Austria, this difference was temporarily up to 1.9 percentage points. The present study shows that the difference in question can in part be attributed to the fact that people 's perception of inflation seems to be based mainly on the prices of goods they buy frequently, whereas official price indices also take into account goods that are purchased less often. According to recent hypotheses on perceived inflation (Brachinger, 2005a), the public furthermore perceives price increases more strongly than price reductions. Since the prices of frequently bought goods rose faster after the cash changeover than those of rarely purchased goods, and a higher (unweighted) share of goods became more expensive, people may have perceived the general price rise to have been more pronounced than it actually was. This perception seems to have been reinforced by the fact that consumers expected prices to rise as a result of the euro cash changeover and that they used outdated schilling reference prices when assessing prices in euro. Moreover, the initial lack of psychological prices may have made it more difficult for consumers to become used to prices in euro. Perceived inflation proved to be unexpectedly persistent: It was not until the beginning of 2005 that the gap between perceived inflation and actual inflation was more or less closed. Since then, the close link between actual and perceived inflation that was prevalent before the euro cash changeover seems to have gradually resurfaced. The fact that the above-mentioned gap opened up again in the middle of 2005 can probably be explained by the sharp increase in oil prices. JEL classification: E31, E50 Classification-JEL: E31, E50 Keywords: inflation, perceived inflation. Pages: 22–47 Year: 2005 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:24ab8fb0-4a9b-4ea9-a88f-974d7ef66e84/mop_2005_q3_analysis2_tcm16-34757.pdf File-Format: application/pdf File-Size: 245 kb Handle: RePEc:onb:oenbmp:y:2005:i:3:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Jürgen Janger Author-Name-First: Jürgen Author-Name-Last: Janger Author-Email: juergen.janger@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Claudia Kwapil Author-Name-First: Claudia Author-Name-Last: Kwapil Author-Email: claudia.kwapil@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: (+43-1) 404 20-7415 Author-Workplace-Fax: (+43-1) 404 20-7499 Author-Name: Wolfgang Pointner Author-Name-First: Wolfgang Author-Name-Last: Pointner Author-Email: wolfgang.pointner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: The Determinants of Consumption Growth in Austria – Results of a Representative Survey Abstract: In the period from 2001 to 2004, Austrian households' consumption expenditure increased by 0.9% per annum in real terms, thus growing 1.6 percentage points more slowly on average than in the period from 1989 to 2000. Subdued consumption growth is attributable not only to economic stagnation, but also to a higher saving rate than is usual at the current stage of the economic cycle. To explain this unusual consumer behavior, numerous hypotheses have been formulated that go beyond the conventional determinants of consumption. In this study, the hypotheses were tested against the results of a representative survey carried out among Austrian households in August 2004. 36% of respondents said they had cut consumption expenditures in the previous 12 months, while 52% claimed to have kept consumption stable and roughly 12% of those surveyed said they had increased consumption expenditures. Among the motives for lower consumption, respondents most frequently cited perceived price increases, the income situation, a pessimistic income outlook and a trend toward smart shopping, while they considered anticipated cuts in pensions or other public benefits, waiting for prices to drop (withholding consumption) and too cautious economic reforms less relevant and geopolitical uncertainties, mounting public debt and liquidity constraints irrelevant. JEL classification: E21 Keywords: consumption, Austria Pages: 48–65 Year: 2005 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:90122081-00d0-44a9-8dc5-85766f6900f6/mop_2005_q3_analysis3_tcm16-34758.pdf File-Format: application/pdf File-Size: 173 kb Handle: RePEc:onb:oenbmp:y:2005:i:3:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Maria Antoinette Silgoner Author-Name-First: Maria Antoinette Author-Name-Last: Silgoner Author-Email: Maria.Silgoner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: An Overview of European Economic Indicators: Great Variety of Data on the Euro Area, Need for More Extensive Coverage of the New EU Member States Abstract: This contribution provides an overview of the most common short-term indicators of economic development in the euro area. These indicators are useful when official data are released with long time lags or if they are subject to major revisions. Indicators based on surveys among businesses, households, financial market analysts or forecasters have the advantage of providing detailed and timely information on individual sectors on a monthly basis and largely without later revision. As an additional instrument, composite indicators, which are calculated by combining a variety of measures into a single indicator with the help of regression and factor analysis, offer an attractive tool for drawing conclusions from different, often divergent signals. Even the most reliable economic indicators, however, can only be interpreted as constituent elements of comprehensive economic analysis. With regard to the new EU Member States, coverage is found to be limited as yet. This study also shows that the forecasting quality of the European Commission 's business and consumer surveys for the new Member States is not as high as for the other EU Member States. As the reliability of economic indicators increases as forecasting institutions and respondents gain more experience, coverage of established indicators should be extended early on to this group of countries, in particular as some of the new Member States may soon join the euro area. JEL classification: 0110, 520 Keywords: Leading indicators. Pages: 66–89 Year: 2005 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:5caf75ee-6277-4f29-92ab-013a6c80867b/mop_2005_q3_analysis4_tcm16-34759.pdf File-Format: application/pdf File-Size: 227 kb Handle: RePEc:onb:oenbmp:y:2005:i:3:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Johann Scharler Author-Name-First: Johann Author-Name-Last: Scharler Author-Email: scharler@sfu.ca Author-Workplace-Name: Simon Fraser University, Department of Economics, 8888 University Drive, Burnaby, B.C., Canada V5A 1S6 Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: (+43-0) 732-2468-8360 Author-Workplace-Fax: (+43-0) 732-2468-9679 Title: Temporary Slowdown of Economic Activity in Austria Expected to Be Overcome Fast, but Downside Risks Increased — Economic Outlook for Austria from 2005 to 2007 (June 2005) Abstract: According to the June 2005 economic outlook of the Oesterreichische Nationalbank (OeNB), Austria's real gross domestic product (GDP) is projected to grow 2.0% in 2005 and to advance to 2.2% both in 2006 and 2007. Fueled by the oil price surge, inflation as measured by the Harmonised Index of Consumer Prices (HICP) will rise to 2.3% in 2005 before dropping noticeably below the 2 percent mark in subsequent years. The second stage of the tax reformwill result in the budget deficit (Maastricht definition) declining temporarily to 1.8% and 1.7% of GDP in 2005 and 2006, respectively. In 2007, the budget balance will improve to —1.3% of GDP. Keywords: Economic Forecast Pages: 8–26 Year: 2005 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:07f8373a-2df0-4a61-88ad-fab630919f22/mop_e_02_05_analyses1_tcm16-30238.pdf File-Format: application/pdf File-Size: 345 kb Handle: RePEc:onb:oenbmp:y:2005:i:2:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Peter Mooslechner Author-Name-First: Peter Author-Name-Last: Mooslechner Author-Email: peter.mooslechner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: 10 Years of Austrian EU Membership: Elements of an Overall Economic Assessment Abstract: Austria has been a member of the EU for ten years now. Although accession to the EU would have been economically feasible much sooner, for political reasons, in particular, it had to wait until the end of the Soviet era. On balance, this has been quite a positive decade, though so many relevant changes took place simultaneously — worldwide liberalization trends, the opening up of Central and Eastern Europe, and the establishment of monetary union, to name a few — that it is hardly possible to identify which effects stem solely from EU accession. It is equally inadvisable to see the process of European integration, in its all-inclusiveness, purely under economic aspects. Accession to the EU has fundamentally changed the institutional landscape, which today is dominated by Europe. It has also left its imprint on financial markets and foreign trade as well as the labor market and the regulatory framework. Many of those changes would have been unavoidable even without EU accession. However, in many cases accession was the catalyst for a renewal; in its absence, many structural adjustments would have probably occurred either later or not at all. Keywords: Austria, EU membership, 10 Years, Economic Assessment Pages: 28–41 Year: 2005 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:bf27ea67-f890-4a7b-9150-20e1fefe6670/mop_e_02_05_analyses2_tcm16-30239.pdf File-Format: application/pdf File-Size: 307 kb Handle: RePEc:onb:oenbmp:y:2005:i:2:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Sandra Dvorsky Author-Name-First: Sandra Author-Name-Last: Dvorsky Author-Email: sandra.dvorsky@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, European Affairs and International Financial Organizations Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Isabella Lindner Author-Name-First: Isabella Author-Name-Last: Lindner Author-Email: isabella.lindner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, European Affairs and International Financial Organizations Division Title: 10 Years of EU Membership: The OeNB in a Changing Environment Abstract: This study discusses the integration developments which have had an institutional, legal and functional effect on the Oesterreichische Nationalbank (OeNB) since Austria joined the European Union. The first stage of Austria's EU membership (1995 to 1998) brought about three major challenges for the OeNB: integration into European bodies and forums, achievement of economic and legal convergence and preparation for monetary union. Once Stage Three of Economic and Monetary Union (EMU) began on January 1, 1999, the OeNB became a member of the European System of Central Banks (ESCB) and the Eurosystem, which went hand in hand with fundamental changes in the structure of the OeNB's tasks in almost all business areas. The introduction of euro banknotes and coins on January 1, 2002, an undertaking requiring an effective communication policy coupled with sophisticated cash logistics, posed a formidable challenge. The OeNB has succeeded in maintaining its role as a think tank and decision-making body for economic policy in Austria, and in making a contribution to stability and peace in the enlarged EU within the framework of European institutions and the Eurosystem. Keywords: Central Bank, EU Membership, Austria, Institutions Pages: 42–52 Year: 2005 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:2d39d91e-f56c-4972-83ad-69d03c0628b9/mop_e_02_05_analyses3_tcm16-30240.pdf File-Format: application/pdf File-Size: 240 kb Handle: RePEc:onb:oenbmp:y:2005:i:2:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Ernest Gnan Author-Name-First: Ernest Author-Name-Last: Gnan Author-Email: ernest.gnan@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7400 Author-Name: Claudia Kwapil Author-Name-First: Claudia Author-Name-Last: Kwapil Author-Email: claudia.kwapil@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: (+43-1) 404 20-7415 Author-Workplace-Fax: (+43-1) 404 20-7499 Author-Name: Maria Teresa Valderrama Author-Name-First: Maria Teresa Author-Name-Last: Valderrama Author-Email: maria.valderrama@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Title: EU and EMU Entry: A Monetary Policy Regime Change for Austria? Abstract: Economic and Monetary Union (EMU) has changed the monetary policy regime applicable in Austria in many respects, but the stability orientation of Austria's monetary policy has been maintained. EMU's institutional framework and the actual monetary policymaking of the Eurosystem have secured Austria's legacy of monetary stability at the European level. Decision making at theOesterreichische Nationalbank (OeNB), which had been shaped by the system of social partnership, is now characterized by a greater degree of formal central bank independence. The assignment of various economic policy goals to specific policymakers or institutions, an approach Austria had already followed under the hard currency regime, was maintained under EMU. Like the hard currency policy, the Eurosystem's monetary policy has a medium- to longterm orientation. EMU stabilized Austria's nominal effective exchange rate even more than the hard currency policy could. Therefore, low domestic inflation and wage moderation play an even more important role in maintaining price competitiveness than in the past. The stable real effective exchange rate bears witness to the success in achieving this up to now. Monetary Conditions Indices and Taylor rules suggest that the monetary policy framework has eased for Austria under EMU. EU and EMU entry may have changed various channels of the monetary policy transmission mechanism. Keywords: EU, EMU, Monetary Policy, Austria Pages: 53–68 Year: 2005 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:1e85a38c-3e7b-469f-94eb-009895ee6056/mop_e_02_05_analyses4_tcm16-30242.pdf File-Format: application/pdf File-Size: 363 kb Handle: RePEc:onb:oenbmp:y:2005:i:2:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Manfred Fluch Author-Name-First: Manfred Author-Name-Last: Fluch Author-Email: manfred.fluch@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Communications, Planning and Human Resources Department Author-Name: Fabio Rumler Author-Name-First: Fabio Author-Name-Last: Rumler Author-Email: fabio.rumler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Title: Price Developments in Austria after EU Accession and in Monetary Union Abstract: Austrians widely expected prices to fall on account of EU accession, participation in the Single Market and the resulting stepped-up competition. In hindsight, this assessment was partly correct. In the course of the decade from 1995 to 2004, the inflation rate dropped by half to 1.5% per annum from 2.7% (1987—1994). Initial price declines, e.g. in the food sector and later also in some service industries (such as the insurance industry), however, turned out to be mostly short-lived. By contrast, a number of technical industrial goods, such as computer equipment, saw sustained and in part huge price reductions. Liberalization entailed price effects in network industries, with prices in the telecommunications sector a case in point: they decreased over extended periods. Conversely, prices in many service industries have been continually uptrending. Overall inflation hardly changed following the street debut of euro banknotes and coins at the beginning of 2002; yet, prices of some items bought on a day-to-day basis have increased sharply since then. An analysis of the prices of individual items points to frequent price adjustments that coincided with the euro cash changeover in January 2002. Since upward and downward price adjustments roughly balanced each other out, no marked effect on the aggregate inflation rate was observed. To date, European integration has steadily caused price levels to converge, albeit at an altogether modest pace. Keywords: Prices, Inflation, Austria, Monetary Union, EU Accession Pages: 69–89 Year: 2005 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:95b71750-173f-4ac4-b74c-848bb5aa86e6/mop_e_02_05_analyses5_tcm16-30243.pdf File-Format: application/pdf File-Size: 380 kb Handle: RePEc:onb:oenbmp:y:2005:i:2:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Wolfgang Pointner Author-Name-First: Wolfgang Author-Name-Last: Pointner Author-Email: wolfgang.pointner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: In & Out – A Country Comparison Reflecting on the Enlargement Round of 1995 Abstract: This paper provides an overview of the economic effects EU membership has had on the countries Austria, Finland and Sweden since their accession in 1995, primarily focusing on implications for price stability and GDP growth. EU accession has led to an intensification of competition or opened up industries to competition in the first place. This, in turn, has dampened prices, in particular in previously sheltered sectors like the agricultural sector. Economic integration has also had a positive effect on GDP growth, increasing annual growth by approximately 0.5 percentage point. As a non-EU member, Switzerland did not experience these benefits. Keywords: EU Enlargement 1995 Pages: 90–100 Year: 2005 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:e8151279-1d90-4f92-8407-f8436bcd781b/mop_e_02_05_analyses6_tcm16-30244.pdf File-Format: application/pdf File-Size: 305 kb Handle: RePEc:onb:oenbmp:y:2005:i:2:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Alfred Katterl Author-Name-First: Alfred Author-Name-Last: Katterl Author-Email: alfred.katterl@bmf.gv.at Author-Workplace-Name: Federal Ministry of Finance Author-Name: Walpurga Köhler-Töglhofer Author-Name-First: Walpurga Author-Name-Last: Köhler-Töglhofer Author-Email: walpurga.koehler-toeglhofer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: The Impact of EU Accession on Austria's Budget Policy Abstract: This paper analyzes Austria's budget policy prior to accession to the European Union (EU) and budgetary action taken to support the opening up of the domestic economy and its integration into the EU. Moreover, it assesses the impact that joining the European monetary union has had on Austria's fiscal strategy. The analysis reveals several regime changes over the past few decades: While the fiscal policy goal of the 1960s was, in essence, that of achieving a balanced budget, the government's commitment in the 1970s to developing the welfare state and to pursuing a stabilizing role in addition to its allocation function fundamentally changed the fiscal framework. The rapid rise in the debt ratio that ensued in the second half of the 1970s triggered a debate on the necessity of enforcing upper limits for budget deficits (as a percentage of GDP). This debate led to the proposition of the so-called Seidel formula, with which the federal government's budget deficit regained significance as a fiscal policy target. The government indeed responded to the rising interest payments on the spiraling debt with — heavily debated — consolidation measures. While EU accession as such in 1995 was not deemed to create substantial need for fiscal action, a general government deficit ratio in excess of 5% of GDP called for significant consolidation measures in its own right in 1996 and 1997 in order to ensure that Austria would be among the founding members of the euro area. The new coalition government coming into office in 2000 staged a fiscal policy turnaround in so far as it propagated the goal of a balanced general government budget, which was indeed reached in 2001. Yet given the ongoing weakness of the economy, the goal of achieving strictly balanced budgets has since been redefined into balancing the general government budget over the business cycle. With its decision to design another tax reform, not fully financed right away, Austria recently changed its fiscal policy strategy yet again, incurring a “temporary deviation” from the medium-term target under the Stability and Growth Pact Keywords: EU, Accession, Austria, Budget Policy Pages: 101–116 Year: 2005 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:c6494068-27ec-4d90-aa4d-5757395f3ba9/mop_e_02_05_analyses7_tcm16-30246.pdf File-Format: application/pdf File-Size: 281 kb Handle: RePEc:onb:oenbmp:y:2005:i:2:b:7 Template-Type: ReDIF-Article 1.0 Author-Name: Walter Waschiczek Author-Name-First: Walter Author-Name-Last: Waschiczek Author-Email: walter.waschiczek@oenb.at. Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: The Impact of EU Accession on Austria's Financial Structure Abstract: The trend toward deregulation in the Austrian financial system has gained considerable momentum owing to the country's EU accession in 1995. The relative importance of bank intermediation has declined, while the competitive pressure of euro area banks has remained fairly low to date. Austrian banks reacted to the challenges posed by EU membership by adopting, in essence, three strategies: stepping up the number of mergers and acquisitions, cutting resources and internationalizing their business activities, moving especially into the financial markets of Central and Eastern Europe (CEE). The spectrum of enterprises' financing options has increased considerably as a result of EU membership, whereas hardly any effects have been observed on households' investment decisions. Keywords: Financial Structure, Austria, Eu Accession Pages: 117–129 Year: 2005 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:46fbf88e-c9e4-45cf-b114-106e5a5052e8/mop_e_02_05_analyses8_tcm16-30247.pdf File-Format: application/pdf File-Size: 304 kb Handle: RePEc:onb:oenbmp:y:2005:i:2:b:8 Template-Type: ReDIF-Article 1.0 Author-Name: Matthias Fuchs Author-Name-First: Matthias Author-Name-Last: Fuchs Author-Email: matthias.fuchs@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: The Internationalization of Austria's Financial Sector since Accession to the European Union Abstract: Since the mid-1990s, Austria and many other industrialized countries have experienced massive growth in their external asset and liability positions. However, Austria's high degree of real economic integration due to its position as a small, open economy only partly explains this development. Autonomous financial transactions, effected independently of external trade financing from a profit motive, are increasingly determining cross-border movements of capital. Legal measures adopted in the run-up to Austria's accession to the EU (e.g. the full liberalization of the Austrian financial sector) favored this development, as did the country's participation in Economic and Monetary Union (EMU). In terms of the rate of internationalization, Austria has as high a degree of financial integration as Finland and Sweden. However, it lags well behind Switzerland or the Netherlands in this respect. In terms of GDP, foreign equity holdings are on a far smaller scale in Austria than in these countries. Austrian securities investors prefer foreign debt investments. The euro area is Austria's most important investment and financing region — especially for securities. In the 10-year observation period, Austria's net income from foreign investments is in line with the European average. Keywords: Financial Sector, Austria, Internationalization Pages: 130–143 Year: 2005 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:527c6dad-d163-40e0-b81d-7f0dcc7ad5a5/mop_e_02_05_analyses9_tcm16-30248.pdf File-Format: application/pdf File-Size: 356 kb Handle: RePEc:onb:oenbmp:y:2005:i:2:b:9 Template-Type: ReDIF-Article 1.0 Author-Name: Franz Pauer Author-Name-First: Franz Author-Name-Last: Pauer Author-Email: franz.pauer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at/ Author-Workplace-Phone: +43(1)404-20-3118 Author-Workplace-Fax: +43(1)404-20-3199 Title: Financial Market Integration and Financial Stability Abstract: The present study deals with the consequences of Austria's integration into the Common Market and into Economic and Monetary Union for its financial stability. It shows that financial stability has been increased by a more efficient allocation of capital (as a result of intense competition), a higher degree of risk diversification, a reduced probability of asymmetric shocks and enhanced influence on the establishment of a harmonized framework. These positive effects have to some extent been weakened only by the increased risk of cross-border spillover effects and the growing importance of systemically relevant institutions. Setbacks in the earnings of financial institutions brought about by the integration process seem to have been offset at least in part by measures leading to higher cost efficiency. The cooperation of European countries in the regulation and supervision of financial institutions has promoted the positive integration effects of financial stability while weakening those reducing financial stability. Keywords: Economic Forecast Pages: 144–151 Year: 2005 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:a2c7ce4e-5ff0-4496-a3f4-900fccb84668/mop_e_02_05_analyses10_tcm16-30249.pdf File-Format: application/pdf File-Size: 274 kb Handle: RePEc:onb:oenbmp:y:2005:i:2:b:10 Template-Type: ReDIF-Article 1.0 Author-Name: Alfred Stiglbauer Author-Name-First: Alfred Author-Name-Last: Stiglbauer Author-Email: alfred.stiglbauer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7435 Title: Has Accession to the EU and Monetary Union Changed Austria's Labor Market? State of Play and Need for Action Abstract: Amid increasing internationalization, the domestic labor market had undergone fundamental changes even before Austria joined the EU. In the ten years since, total employment has virtually risen as fast as in the decade before accession, while the increase in dependent employment has been more moderate. Total, long-term and youth unemployment has continued to be low by international standards. Modest growth of wages and unit labor costs has promoted price stability and reinforced Austria's competitiveness. Growth of real wages, however, has slowed down. Many structural problems on the domestic labor market were already in sight at the time of accession. Austria may yet better utilize its unused potential in the employment of women and, in particular, of older people. Keywords: Labour Market, Austria, EU, Monetary Union Pages: 152–169 Year: 2005 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:aef17237-6e9d-438a-bbb5-893fe84cb720/mop_e_02_05_analyses11_tcm16-30250.pdf File-Format: application/pdf File-Size: 329 kb Handle: RePEc:onb:oenbmp:y:2005:i:2:b:11 Template-Type: ReDIF-Article 1.0 Author-Name: Jarko Fidrmuc Author-Name-First: Jarko Author-Name-Last: Fidrmuc Author-Email: jarko.fidrmuc@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Foreign Research Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-5218 Author-Workplace-Fax: +43-1-40420-5299 Title: Austria's EU Accession and Trade Abstract: This contribution discusses the development of Austria's trade with the European Union. First, a descriptive analysis shows that Austrian exports to the European Union were adversely affected by trade barriers during the 1980s and in the first half of the 1990s. As a result, Austria's market shares in the European Union declined steadily until 1995. Second, a gravity model for a panel of OECD countries confirms positive trade liberalization effects after the country's accession to the EU. More recently, the introduction of the euro in 1999 seems to have given a new impetus to trade flows between Austria and the countries of the euro area. Keywords: Trade, Austria, EU Accession Pages: 170–177 Year: 2005 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:2c0c9a3f-1e03-4a50-a47d-e43c87b18d06/mop_e_02_05_analyses12_tcm16-30251.pdf File-Format: application/pdf File-Size: 344 kb Handle: RePEc:onb:oenbmp:y:2005:i:2:b:12 Template-Type: ReDIF-Article 1.0 Author-Name: Jürgen Janger Author-Name-First: Jürgen Author-Name-Last: Janger Author-Email: juergen.janger@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Sectoral Regulation in Austria before and after EU Accession — The Network Industries as a Case in Point Abstract: The network industries, which had been organized in a monopolistic fashion up to Austria's EU accession, were opened to competition following a number of EU Directives and are now mostly regulated by sector-specific authorities. This fundamental change to the regulatory system has so far developed quite positively, both in economic terms and from a regulatory perspective regarding the transparency of these authorities' decision-making processes. Accession to the EU served as an essential catalyst for reforming the relevant regulations, which had come to meet their original purpose of correcting market failures only in part. Thus, Austria's EU entry extended the principle of competition from the already exposed manufacturing sector to other sectors of the Austrian economy. However, chances are that the network industries would have been opened to competition even without Austria joining the EU, e.g. on account of its WTO membership or the discrimination against other sectors which would eventually have demanded such reforms. Keywords: Sectoral regulation, Network Industries, Austria, EU Accession Pages: 178–195 Year: 2005 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:eb936c77-9d9a-4f04-bddc-c5cf0a568891/mop_e_02_05_analyses13_tcm16-30252.pdf File-Format: application/pdf File-Size: 353 kb Handle: RePEc:onb:oenbmp:y:2005:i:2:b:13 Template-Type: ReDIF-Article 1.0 Author-Name: Johann Elsinger Author-Name-First: Johann Author-Name-Last: Elsinger Author-Email: Johann.Elsinger@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Ingrid Haar-Stöhr Author-Name-First: Ingrid Author-Name-Last: Haar-Stöhr Author-Email: ingrid.haar-stoehr@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Antje Hildebrandt Author-Name-First: Antje Author-Name-Last: Hildebrandt Author-Email: antje.hildebrandt@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Foreign Research Division Author-Workplace-Homepage: http://www.oenb.at Author-Name: Thomas Reininger Author-Name-First: Thomas Author-Name-Last: Reininger Author-Email: Thomas.Reininger@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Foreign Research Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-5234 Author-Workplace-Fax: +43-1-40420-5299 Author-Name: Gerhard Reitschuler Author-Name-First: Gerhard Author-Name-Last: Reitschuler Author-Email: gerhard.reitschuler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Slowdown in Global Economic Momentum – Asia and the USA To Remain Growth Drivers of World Economy in 2005 Abstract: In 2004, despite the sudden jump in oil prices and the ballooning trade deficit, the U.S. economy grew by 4.4%, or more robustly than ever since 1999. In the same year, growth in consumer prices peaked at 3.3% — the highest level in four years. In early February 2005, the U.S. Fed raised its key interest rates by 25 basis points for the sixth time since mid-2004. Whereas Japan slipped back into a period of recession, other Asian economies continued growing apace in 2004. The second half of the year 2004 saw a slowdown in GDP growth momentum in the euro area. Despite positive stimuli from investments, growth rates declined, due to weaker net exports and still very subdued private consumption demand. Consumer restraint can partly be explained by the sluggish growth in real disposable income as a result of higher energy prices, which are also responsible for the rise in inflation. In the first three quarters of 2004, most new Central European EU Member States expanded at a faster pace than in 2003 as a whole. The upward pressure on prices (partly induced by EU accession) was very strong in the new Member States in 2004. In Romania, an EU candidate country, growth rocketed to an outstanding 10.0% in the third quarter. Following weak growth in the fourth quarter of 2004, Austria's economy is regaining steam, but is not immune to the current slowdown in growth in the euro area as a whole. The OeNB's short-term indicator forecasts 0.4% seasonally adjusted growth in Austria's real GDP for the first and 0.5% for the second quarter of 2005 (each compared with the previous quarter). Keywords: Economic growth Pages: 6–22 Year: 2005 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:8b149c4b-4a51-4c92-9a9b-7f46f51949f0/mop_2005_1_analyses1_tcm16-26923.pdf File-Format: application/pdf File-Size: 289 kb Handle: RePEc:onb:oenbmp:y:2005:i:1:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Markus Knell Author-Name-First: Markus Author-Name-Last: Knell Author-Email: markus.knell@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7218 Author-Workplace-Fax: +43-1-40420-7299 Title: Demographic Fluctuations, Sustainability Factors and Intergenerational Fairness – An Assessment of Austria's New Pension System Abstract: This study discusses important elements of Austria's recently harmonized statutory pension system. In particular, the author investigates in how far the new system responds to the twofold demographic challenge of declining birth rates and increasing life expectancy and what this means in terms of fiscal sustainability and intergenerational redistribution. Austria's defined benefit system is found to have more in common with Germany's system of earnings points than with Sweden's notional account system — with the exception that the sustainability factor, the adjustment mechanism triggered by demographic changes, has been designed differently in Germany and in Austria. A critical analysis of the Austrian provisions identifies the following problems: First, the application of the sustainability factor is activated only by deviations from projections and not to demographic movements as such. Second, adjustments are not to be automatic. Third, the requirement of an “even adjustment7” is not spelled out in detail. Fourth, it is doubtful whether evenness is a desired feature in the first place since generation-specific reproductive behavior is neglected in this scenario. Overall, the basic structure of Austria's new model gets a favorable rating, as it increases the degree of intergenerational fairness, supports individual, intersectoral and international flexibility and corrects some design flaws of the old pension regime. Conversely, weaknesses are identified with regard to the transitional arrangements, the contribution side and the sustainability factor. Keywords: Pension System Pages: 23–42 Year: 2005 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:be7fc67b-ef3a-4b3d-a224-ca3ed691c400/mop_2005_1_analyses2_tcm16-26924.pdf File-Format: application/pdf File-Size: 365 kb Handle: RePEc:onb:oenbmp:y:2005:i:1:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Jürgen Janger Author-Name-First: Jürgen Author-Name-Last: Janger Author-Email: juergen.janger@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: The Research and Development System in Austria – Input and Output Indicators Abstract: This paper analyzes the efficiency of research and development activities in Austria in comparison with other countries. Public and private R&D spending, which has been increasing steadily for years, is evaluated against a set of performance indicators, such as the number of scientific publications and patents. The efficiency of Austria's R&D system is currently rated “average.” This may change in the future, given that productivity growth in the Austrian economy is declining despite the continually rising research and development ratio. In his conclusions, the author presents suggestions for increasing the efficiency of the system, particularly in the areas of university education and research, in the light of the strong interaction with the corporate sector. Keywords: Research and Development Pages: 43–57 Year: 2005 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:7b4ccf45-900c-4ab9-89b7-d4d4d370fbf3/mop_2005_1_analyses3_tcm16-26926.pdf File-Format: application/pdf File-Size: 318 kb Handle: RePEc:onb:oenbmp:y:2005:i:1:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Hannes Haushofer Author-Name-First: Hannes Author-Name-Last: Haushofer Author-Email: hannes.haushofer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Gabriel Moser Author-Name-First: Gabriel Author-Name-Last: Moser Author-Email: gabriel_moser@aon.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-5214 Author-Name: Renate Unger Author-Name-First: Renate Author-Name-Last: Unger Author-Email: renate.unger@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Fundamental and Nonfundamental Factors in the Euro/U.S. Dollar Market in 2002 and 2003 Abstract: The goal of this study is to identify factors which can explain the substantial appreciation of the EUR/USD exchange rate in the period from 2002 to 2003. Our analysis has shown that both fundamental and nonfundamental factors seem to have played a role. Regarding fundamental factors, an accommodating U.S. monetary policy in light of a weak labor market as well as the rising U.S. current account deficit contributed to weakening the U.S. dollar and thus strengthening the euro. The Bank of Japan's large intervention purchases of U.S. dollars, which have been widely considered important in the economic policy debate, do not appear to have had a significant impact on the EUR/USD exchange rate; however, they seem to have weakened the Japanese yen both vis-a‘-vis the U.S. dollar and the euro. In addition to these factors, the accounting scandals in the U.S. stock markets as well as fears of war and terrorism had a dampening effect on market sentiment, thus adding to the strain on the U.S. dollar. Measurement problems render it difficult to assess the role of euro area monetary policy and of European economic data. With a view to nonfundamental factors, we discuss the role of the trend-following behavior of agents in the foreign exchange market on the basis of a technical foreign exchange trading system used in practice. The buy and sell recommendations of such systems may also help explain the appreciation of the euro in the period in question. All in all, these fundamental and nonfundamental factors may explain the direction to which the EUR/USD exchange rate moved, but not the extent of this movement or the relative significance of these factors in determining the EUR/USD exchange rate in the period in question. Keywords: Exchange rates Pages: 58–76 Year: 2005 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:ba1badad-28e8-4242-a765-6714ad7197b7/mop_2005_1_analyses4_tcm16-26928.pdf File-Format: application/pdf File-Size: 348 kb Handle: RePEc:onb:oenbmp:y:2005:i:1:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Andrea Hofer Author-Name-First: Andrea Author-Name-Last: Hofer Author-Email: andrea.hofer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: The International Monetary Fund's Balance Sheet Approach to Financial Crisis Prevention an Resolution Abstract: In 2002, the International Monetary Fund added the Balance Sheet Approach to its set of instruments for monitoring member countries as well as the international financial system and for preventing and resolving financial crises. In this approach, which was predominantly conceived for emerging market economies, the IMF assumes that a country's vulnerability to financial crises depends in part on the financial structure of its sectoral balance sheets. With this instrument, the IMF analyzes the size and the composition of financial assets and liabilities in a country's aggregate balance sheet and its most important sectoral balance sheets (government, banks, corporations and households as well as the rest of the world). The IMF finds indicators of a country's vulnerability to crises by detecting imbalances in its maturity and currency matching, capital structure and solvency. This makes a valuable contribution to crisis prevention and helps to determine the necessary economic policy measures and external financing needs once a financial crisis has emerged. The IMF already employs this approach in its analyses and also plans to use it routinely in future Article IV consultations. Keywords: IMF, Balance Sheet Pages: 77–94 Year: 2005 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:b2523817-57e2-4175-a432-4b62711b777f/mop_2005_1_analyses5_tcm16-26930.pdf File-Format: application/pdf File-Size: 287 kb Handle: RePEc:onb:oenbmp:y:2005:i:1:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Walpurga Köhler-Töglhofer Author-Name-First: Walpurga Author-Name-Last: Köhler-Töglhofer Author-Email: walpurga.koehler-toeglhofer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Name: Margit Schratzenstaller Author-Name-First: Margit Author-Name-Last: Schratzenstaller Author-Email: margit.schratzenstaller@wifo.ac.at Author-Workplace-Name: WIFO Author-Name: Andreas Wagener Author-Name-First: Andreas Author-Name-Last: Wagener Author-Workplace-Name: Universität Wien Title: Company Taxation in an Enlarged European Union Abstract: The Oesterreichische Nationalbank (OeNB), the Austrian Institute of Economic Research (WIFO) and the University of Vienna organized a full-day workshop on Capital Taxation after EU Enlargement, which was hosted by the OeNB on January 21, 2005. Keywords: Company taxation Pages: 96–102 Year: 2005 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:c131089b-7a68-429d-89b1-aa4565e2765a/mop_2005_1_highlights1_tcm16-26931.pdf File-Format: application/pdf File-Size: 130 kb Handle: RePEc:onb:oenbmp:y:2005:i:1:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Growth Stimulus from Tax Reform in 2005 to Overshadow Weaker Global Economic Momentum Abstract: According to the fall 2004 economic outlook of the Oesterreichische Nationalbank (OeNB), Austria's real gross domestic product (GDP) is projected to increase to 1.8% in 2004. Economic growth of 2.3% and 2.1% is expected in 2005 and 2006, respectively. Fuelled by the rise in oil prices, in particular, inflation as measured by the Harmonized Index of Consumer Prices (HICP) will be 1.9% in 2004, 2.0% in 2005 and 1.7% in 2006. The second stage of the tax reform will result in the budget deficit (Maastricht definition) deepening from 1.4% in 2004 to 2.0% in 2005 and to 1.8% in 2006. Keywords: Economic Forecast Pages: 6–24 Year: 2004 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:4d1b523d-28bb-41e5-8239-98b9ce3a099a/mop_2004_4_analyses1_tcm16-23738.pdf File-Format: application/pdf File-Size: 181 kb Handle: RePEc:onb:oenbmp:y:2004:i:4:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Werner Dirschmid Author-Name-First: Werner Author-Name-Last: Dirschmid Author-Email: werner.dirschmid@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Ernst Glatzer Author-Name-First: Ernst Author-Name-Last: Glatzer Author-Email: ernst.glatzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at Title: Determinants of the Household Saving Rate in Austria Abstract: The last few decades have seen a decline in the household saving rate in Austria and other industrial countries. Using an error correction model, this paper shows that in Austria personal saving decisions are influenced by income growth, real interest rates, inflation, social security expenditure and the general government budget balance. These findings are becoming increasingly important for economic policy, given the aging of society and the concomitant need for pension system reform. In future, households will be required to make greater provision for themselves and step up their saving efforts. As the results show, this can be achieved by productivity-boosting measures that generate income growth and promote personal saving. Keywords: Saving, saving ratio Pages: 25–38 Year: 2004 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:e4073824-6dd5-4d89-8a52-c6951e41ab7a/mop_2004_4_analyses2_tcm16-23739.pdf File-Format: application/pdf File-Size: 167 kb Handle: RePEc:onb:oenbmp:y:2004:i:4:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Walter Waschiczek Author-Name-First: Walter Author-Name-Last: Waschiczek Author-Email: walter.waschiczek@oenb.at. Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: The Role of Corporate Bonds for Finance in Austria Abstract: With corporate bond issuance having grown at a fast pace in Austria in recent years, bonds have become firmly established as a pillar of the financing structure of the domestic corporate sector. More and more issuers are smaller firms, and they come from a broad range of industries. Bond financing allows companies to diversify their financing sources and to broaden their creditor base beyond the banking industry. Rather than drive up corporate debt, bonds have become an alternative to bank loans as a borrowing instrument. Compared with loans, bonds allow companies to borrow money over longer horizons, but high upfront costs make this instrument more attractive for companies that need to finance large volumes. Moreover, bonds are not equally appropriate for all financing requirements, which is why they will never fully replace loans in the long term. Finally, more stringent requirements implicitly apply to the quality of a company's credit ratings when companies intend to issue bonds than when they apply for a bank loan. So far, there have been very few cases of bond defaults in Austria. Keywords: Corporate bonds Pages: 39–52 Year: 2004 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:1f34f20f-4612-4c59-9b83-337ee82cc9a5/mop_2004_4_analyses3_tcm16-23740.pdf File-Format: application/pdf File-Size: 158 kb Handle: RePEc:onb:oenbmp:y:2004:i:4:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Gabriel Moser Author-Name-First: Gabriel Author-Name-Last: Moser Author-Email: gabriel_moser@aon.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-5214 Author-Name: Wolfgang Pointner Author-Name-First: Wolfgang Author-Name-Last: Pointner Author-Email: wolfgang.pointner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Gerhard Reitschuler Author-Name-First: Gerhard Author-Name-Last: Reitschuler Author-Email: gerhard.reitschuler@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Economic Growth in Denmark, Sweden and the United Kingdom since the Start of Monetary Union Abstract: This study analyzes GDP growth in Denmark, Sweden and the United Kingdom, examining the determinants of potential growth, cyclical fluctuations in GDP and the contribution of the national economic policy of each of the three countries. High spending on research and development, particularly in information and communications technology, is identified as the main force driving growth in Sweden while a robust increase in private consumption resulting from rising asset prices is found to have been the key growth driver in the United Kingdom. In Denmark and Sweden, swings in the business cycle are being successfully offset through fiscal policy and other measures. The United Kingdom has made considerable progress with respect to business cycle convergence with the euro area, a significant factor for joining Economic and Monetary Union. Keywords: Economic Growth, Monetary Union Pages: 53–66 Year: 2004 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:adc59237-7238-4316-a7d1-6a836a55b7a3/mop_2004_4_analyses4_tcm16-23741.pdf File-Format: application/pdf File-Size: 162 kb Handle: RePEc:onb:oenbmp:y:2004:i:4:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Vanessa Redak Author-Name-First: Vanessa Author-Name-Last: Redak Author-Email: vanessa.redak@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Helene Schuberth Author-Name-First: Helene Author-Name-Last: Schuberth Author-Email: helene.Schuberth@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43(1)404-20-7405 Author-Workplace-Fax: +43(1)404-20-7499 Author-Name: Beat Weber Author-Name-First: Beat Author-Name-Last: Weber Author-Email: beat.weber@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: The Political Economy of International Financial Governance Abstract: The OeNB recently organized a workshop on The Political Economy of International Financial Governance to analyze current trends in financial governance from both an economic efficiency and an institutional perspective. Following a discussion of controversial financial governance theories, a number of case studies were presented on current issues, including financial market integration in the EU, changes in private sector associational activity in global finance, the Basel II process, the governance of pension funds, the market for over the counter (OTC) derivates as well as financial literacy programs. The case studies highlighted the role that noneconomic factors play in financial governance mechanisms. With a view to developing more realistic models, further research and more case studies will have to be undertaken to broaden the empirical basis for theorizing financial governance. Keywords: Financial Goverance Pages: 68–72 Year: 2004 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:f463a652-330b-41d6-bab3-cd6278bd7036/mop_2004_4_highlights1_tcm16-23737.pdf File-Format: application/pdf File-Size: 74 kb Handle: RePEc:onb:oenbmp:y:2004:i:4:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: Macroeconomic Models and Forecasts for Austria Abstract: On November 11 and 12, 2004, the Oesterreichische Nationalbank (OeNB) held a workshop entitled Macroeconomic Models and Forecasts for Austria. The purpose of the workshop was to provide an overview of the econometric models developed and used in Austria, and to promote exchanges between the main institutions that work on modeling in Austria, namely WIFO (Austrian Institute of Economic Research), IHS (Institute for Advanced Studies), Joanneum Research and the OeNB. This workshop — the first of its kind held in Austria — covered the bulk of the econometric models used regularly in Austria and attracted nearly 100 participants. The papers presented at the workshop are scheduled to appear in an issue of the OeNB Workshop Series in the first quarter of 2005. Keywords: Macroeconomic Models, Austria Pages: 73–76 Year: 2004 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:39cd44e8-5617-43fa-ba97-85d2f3982f2a/mop_2004_4_highlights2_tcm16-23742.pdf File-Format: application/pdf File-Size: 70 kb Handle: RePEc:onb:oenbmp:y:2004:i:4:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Paul Schmidt Author-Name-First: Paul Author-Name-Last: Schmidt Author-Email: paul.schmidt@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: A Constitutional Treaty for an Enlarged Europe: Institutional and Economic Implications for Economic and Monetary Union Abstract: As the negotiations on the Treaty establishing a Constitution for Europe have been concluded and the Constitutional Treaty1 has been signed by the Heads of State or Government of the Member States of the European Union (EU), the Oesterreichische Nationalbank (OeNB) organized an international workshop held on November 5, 2004, in Vienna. The workshop gave an overview of the institutional implications the Constitutional Treaty may have for Economic and Monetary Union (EMU). Furthermore, speakers analyzed the institutional framework for financial stability in Europe and the role fiscal policy and the Stability and Growth Pact play in an enlarged Europe. Keywords: Treaty Pages: 77–80 Year: 2004 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:22dcb3fc-0a61-4b8e-b7a5-c148e1c1cbcc/mop_2004_4_highlights3_tcm16-23744.pdf File-Format: application/pdf File-Size: 74 kb Handle: RePEc:onb:oenbmp:y:2004:i:4:b:7 Template-Type: ReDIF-Article 1.0 Author-Name: Alfred Stiglbauer Author-Name-First: Alfred Author-Name-Last: Stiglbauer Author-Email: alfred.stiglbauer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7435 Title: Longer Working Hours? More Flexible Work Schedules? Do Austrian Economic Policymakers Need to Act? Abstract: On September 23, 2004, the Oesterreichische Nationalbank (OeNB) hosted a workshop to discuss extending working hours and increasing working time flexibility. After Peter Mooslechner (OeNB) outlined the development of the present discussion in the media and presented some facts, the participants delivered their statements. Erhard Fu‹rst (Federation of Austrian Industry and Austria perspektiv) called for more flexibility rather than for an extension of working hours. He supported this view by pointing to the rising competitive pressure on enterprises. Sepp Zuckersta‹tter (Chamber of Labor) opposed lengthening working hours, because this would reduce employment and decrease aggregate demand. In his opinion the current regulations are sufficient. Herbert Walther (Vienna University of Economics and Business Administration) explained that in theoretical models the impact of more flexible working hours on employment is uncertain. Moreover, no connection between the degree of flexibility and key labor market indicators could be established. In the weeks and months preceding the workshop the media reported calls for the extension of standard working hours and more flexible working hours in enterprises. Keywords: Working hours, schedules Pages: 81–86 Year: 2004 Issue: 4 File-URL: https://www.oenb.at/dam/jcr:38803016-16c1-404c-9aac-5123446dcfdc/mop_2004_4_highlights4_tcm16-23743.pdf File-Format: application/pdf File-Size: 115 kb Handle: RePEc:onb:oenbmp:y:2004:i:4:b:8 Template-Type: ReDIF-Article 1.0 Author-Name: Antje Hildebrandt Author-Name-First: Antje Author-Name-Last: Hildebrandt Author-Email: antje.hildebrandt@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Foreign Research Division Author-Workplace-Homepage: http://www.oenb.at Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Author-Name: Maria Antoinette Silgoner Author-Name-First: Maria Antoinette Author-Name-Last: Silgoner Author-Email: Maria.Silgoner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Economic Recovery in the Euro Area and in Austria in a Dynamic Global Economic Environment Abstract: Economic Recovery in the Euro Area and in Austria in a Dynamic Global Economic Environment Keywords: Economic Growth Pages: 6–21 Year: 2004 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:d533c615-bad9-4b01-9e9d-9e2684d2af21/mop_20043_analyses1_tcm16-21307.pdf File-Format: application/pdf File-Size: 179 kb Handle: RePEc:onb:oenbmp:y:2004:i:3:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Michael Pfeiffer Author-Name-First: Michael Author-Name-Last: Pfeiffer Author-Email: Michael.Pfeiffer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Measures to Improve the Efficiency of the Operational Framework for Monetary Policy Abstract: This study shows that strong interest rate expectations can have a massive short-term impact on counterparties' bidding behavior if certain conditions for monetary policy operations are present. This increases the probability of an undesirable reaction of potentially more volatile short-term money market rates. Therefore, during the first quarter of 2004 the Eurosystem took steps to counter such potential negative repercussions on signaling the monetary policy stance. The modifications are to make an important contribution toward increasing the efficiency of the operational framework for monetary policy. In another area — the risk control framework for eligible assets — the Eurosystem implemented measures to increase the precision and transparency of the valuation of these assets and adopted a more precise definition of the criteria for certain credit standards. Keywords: Monetary Policy Pages: 22–33 Year: 2004 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:cb9ca852-44e6-4d79-a894-ee90d94cf742/mop_20043_analyses2_tcm16-21308.pdf File-Format: application/pdf File-Size: 158 kb Handle: RePEc:onb:oenbmp:y:2004:i:3:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Doris Prammer Author-Name-First: Doris Author-Name-Last: Prammer Author-Email: doris.prammer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Expansionary Fiscal Consolidations? An Appraisal of the Literature on Non-Keynesian Effects of Fiscal Policy and a Case Study for Austria Abstract: This paper reviews the key theoretical and empirical findings of the literature on non-Keynesian effects of fiscal policy, or “expansionary fiscal consolidations.” Specifically, it seeks to identify why the empirical evidence is rather ambiguous about the effects that fiscal contractions have on private consumption, investment, national saving and output. The empirical evidence surveyed in this paper is found to provide no clear support for the existence of expansionary fiscal consolidations. The safest conclusion seems to be that fiscal policy has lost some of its ability to stabilize the economy over the recent past. Austria's fiscal consolidation of 1995—1997, identified as expansionary by the European Commission, is found to have relied significantly on one-off measures. Keywords: Fiscal Policy Pages: 34–52 Year: 2004 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:c476adcc-3bb8-42b4-bddc-6e00eb41194a/mop_20043_analyses3_tcm16-21309.pdf File-Format: application/pdf File-Size: 188 kb Handle: RePEc:onb:oenbmp:y:2004:i:3:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Peter Breyer Author-Name-First: Peter Author-Name-Last: Breyer Author-Email: Peter.Breyer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Central and Eastern Europe – The Growth Market for Austrian Banks Abstract: Although the Central and Eastern European banking market (excluding Russia) is relatively small with total assets of some EUR 350 billion (by comparison, total assets of banks operating in Austria were some EUR 605 billion at the end of 2003), it is nevertheless a growth market. In addition to higher economic growth, the low degree of bank intermediation (about a third of its Western European equivalent) suggests strong growth potential for banks in Central and Eastern Europe (CEE) in the coming years. Above-average growth potential, higher interest margins than in Western Europe and restructuring potential have led Western European banks to invest heavily in the CEE banking sector. Approximately 70% of the CEE banking market is currently controlled by Western European banking groups. Austrian banks were among the first to invest in Central and Eastern European countries and are now some of the best-known Western European banks in the region (market share in the region: about 22%). As early as 2002 and 2003, steady expansion in the CEE region had a positive impact on the profitability of Austria's consolidated banking sector. Favorable reports on the CEE banking market, however, often ignore potential risks. Key sources of risk in the Central and Eastern European banking market are macroeconomic imbalances, the risk of growing exchange rate volatility, credit risk, increasingly fierce competition and political risks. Keywords: Austrian Banks Pages: 63–88 Year: 2004 Issue: 3 File-URL: https://www.oenb.at/dam/jcr:92d121aa-4534-4e95-b0cb-4f54bf02d290/mop_20043_analyses5_tcm16-21311.pdf File-Format: application/pdf File-Size: 226 kb Handle: RePEc:onb:oenbmp:y:2004:i:3:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Martin Schneider Author-Name-First: Martin Author-Name-Last: Schneider Author-Email: martin.schneider@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7436 Title: The Impact of Oil Price Changes on Growth and Inflation Abstract: This contribution looks into the impact of oil price changes on growth and inflation. Oil price shocks affect the economy through the supply side (higher production costs, reallocation of resources), the demand side (income effects, uncertainties) and the terms of trade. The effects of oil price shocks have become less intense over time (thanks to technological innovation, the development of cost-effective alternative sources of energy, sectoral change and the structural change of the oil market) and are asymmetric. An increase in the price of oil feeds through to GDP growth to a much larger extent than a decline, a phenomenon that can be attributed to adjustment costs associated with sectoral reallocations, the implications of uncertainties for spending on consumer durables and investment, and nominal wage rigidities. Furthermore, the element of surprise in oil price hikes seems to play a considerable role. Thus, when a rise in the price of oil occurs after a prolonged period of oil price stability, it has a larger impact than a price hike which immediately follows previous cuts. The role of monetary policy is still a controversial issue. According to some authors, a tightening of monetary policy following an oil price shock has a much more severe impact than the direct effects of the oil price shock themselves. However, empirical evidence on this matter is ambiguous. Current simulations for the euro area, the U.S.A. and Japan show that a constant oil price rise of 10% generates negative growth effects of some 0.1% a year in the first three years — not taking into account monetary responses. After that, the negative effects quickly fade. The impact on inflation ranges from 0.1 to 0.2 percentage point, with Austria at the lower end of the international spectrum. A simulation of the effects caused by the oil price remaining stable at USD 40 as of the third quarter of 2004 instead of falling to USD 29.2 until 2006 — as assumed in the OeNB Spring 2004 Outlook — would slow down growth in Austria by 0.03 percentage point in 2004 and by 0.2 percentage point in both 2005 and 2006. Inflation would be 0.1, 0.4 and 0.3 percentage point higher in 2004, 2005 and 2006, respectively. Keywords: Prices, inflation, growth, oil Pages: 27–36 Year: 2004 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:db783f84-1942-48d3-bfeb-02bff0d3a525/mop_20042_the_impact_tcm16-19678.pdf File-Format: application/pdf File-Size: 154 kb Handle: RePEc:onb:oenbmp:y:2004:i:2:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Jürgen Janger Author-Name-First: Jürgen Author-Name-Last: Janger Author-Email: juergen.janger@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Karin Wagner Author-Name-First: Karin Author-Name-Last: Wagner Author-Email: karin.wagner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Title: Sectoral Specialization in Austria and in the EU-15 Abstract: This study examines sectoral specialization patterns in the EU-15 and in the euro area as well as in Austria. These patterns have policy relevance in so far as a high degree of sectoral specialization may trigger asymmetric shocks, foster the emergence of inflation differentials and impact on long-term growth. The developments seen since 1980 have created a favorable climate for conducting the single monetary policy; the degree of sectoral specialization is low in Austria and the EU, it has changed only moderately and has caused neither cyclical nor inflation differentials. At the same time, the individual sectors shares in value added have changed, in some cases even dramatically. However, there are signs both in the euro area and in Austria that the current sectoral specialization patterns provide suboptimal conditions for long-term growth. Keywords: Specialization, Austria, EU-15 Pages: 37–54 Year: 2004 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:d333c4d0-99da-4cb9-ad0a-4db47aa235a1/mop_20042_sectoral_specialization_tcm16-19679.pdf File-Format: application/pdf File-Size: 191 kb Handle: RePEc:onb:oenbmp:y:2004:i:2:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Markus Knell Author-Name-First: Markus Author-Name-Last: Knell Author-Email: markus.knell@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7218 Author-Workplace-Fax: +43-1-40420-7299 Title: The Role of Revaluation and Adjustment Factors in Pay-As-You-Go Pension Systems Abstract: This study examines the role of revaluation and adjustment factors in pension systems. The first part sheds light on the determination of revaluation and adjustment factors according to the General Social Security Act (Allgemeines Sozialversicherungsgesetz — ASVG) and how these factors have evolved over time. The analysis shows that since the mid-1980s the revaluation factors have been set more or less in line with the inflation rate; in other words, contributions have not, in fact, been revalued in real terms. The author then demonstrates that such a system eventually conflicts with principles of intragenerational and intergenerational fairness. In such case, the mere extension of the assessment period may entail substantial reductions in pension benefits. When we consider the Austrian situation, extending the assessment period from 15 to 40 years may cause the average pension to drop by 11% to 36% (depending on the underlying assumptions). Capping maximum losses at 10% certainly is a solution for persons aged 35+ at the cutoff date, but anyone younger than that would have to bear the brunt of such a pension reform measure. In the light of the problematic fairness aspects of the current revaluation regime, relating the necessary reform of the Austrian pension system and the concomitant paring of benefits too closely to the effects of this revaluation regime does not seem to be the right approach. In a new (harmonized) system, the revaluation factors should at any rate be linked to wage growth. The last section of this paper focuses on issues which are crucial in wage-based revaluation regimes and which are mainly related to the emergence of demographic shifts. Some of the questions tackled are: Should revaluation be based on the growth rate of average earnings or of the total wage bill? Is the 80-45-65 formula frequently cited in the pension reform debate in Austria consistent in itself? Should automatic adjustment factors (sustainability factors) be built into the pension system, and if so, which ones? Does it make any difference then whether we are dealing with a traditional pay-as-you-go pension model or a notional account system? Keywords: Pension Systems Pages: 55–71 Year: 2004 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:b2d09368-b472-476e-921a-b6367bd3ca2e/mop_20042_the_role_of_revaluation_tcm16-19680.pdf File-Format: application/pdf File-Size: 200 kb Handle: RePEc:onb:oenbmp:y:2004:i:2:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Friedrich Fritzer Author-Name-First: Friedrich Author-Name-Last: Fritzer Author-Email: friedrich.fritzer@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7417 Title: Financial Market Structure and Economic Growth: A Cross-Country Perspective Abstract: The paper contributes to understanding the impact of financial system indicators on economic growth. A particular emphasis is placed on financial structure indicators, which measure the specific organization of the financial system, namely, banking sector concentration, foreign bank penetration, government regulation and the efficiency of the banking industry - as opposed to depth indicators, which measure financial market liquidity. In this respect (1) the concentration of banks was found to have a detrimental impact on growth. However, concentration may also have indirect and positive impacts on growth depending on a countries initial stage of economic development, i.e. for comparatively more developed countries, the negative impact of concentration on long-run growth is lower. (2) Financial liquidity indicators, which work through both physical capital accumulation and total factor productivity, have a strong impact on economic growth. The catalyst role capita, finally, determines the growth path of an economy. Low initial real GDP is positively related to the growth path of economies in terms of the "latecomer advantage". Given the detrimental effects of banking sector concentration on economic growth, a tentative policy conclusion would be that antitrust authorities should strive to maintain competitively structured markets. In order to increase competition in an environment subject to mergers, which significantly reduce the number of financial services providers, obstacles to the mobility of customers should be removed, for example by setting and enforcing transparency rules regarding products and prices for financial services. Keywords: Financial Markets, growth Pages: 72–87 Year: 2004 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:4a1331ce-97f9-45b0-b7a8-2dbeffe3f0a9/mop_20042_financial_market_tcm16-19681.pdf File-Format: application/pdf File-Size: 182 kb Handle: RePEc:onb:oenbmp:y:2004:i:2:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Sylvia Kaufmann Author-Name-First: Sylvia Author-Name-Last: Kaufmann Author-Email: sylvia.kaufmann@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7222 Author-Workplace-Fax: +43-1-40420-7299 Author-Name: Maria Teresa Valderrama Author-Name-First: Maria Teresa Author-Name-Last: Valderrama Author-Email: maria.valderrama@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Title: The Role of Bank Lending in Market-Based and Bank-Based Financial Systems Abstract: Theoretical models of the role of credit in business cycles and of the transmission mechanism have largely concluded that, given capital market imperfections, credit conditions may amplify and propagate the effect of shocks in the economy. This paper compares the behavior of loans to households and loans to nonfinancial corporations in Austria, Germany, the Netherlands and the United Kingdom. Analyzing credit aggregates in these countries in a framework accounting for diverging economic environments allows for an assessment of how the amplifying and asymmetric effects of credit aggregates differ between market-based and bank-based financial systems. The results show that the state of the economy impacts the way in which shocks are propagated through credit markets. The effects of shocks are smoothed over time in bank-based financial systems irrespective of the economic environment and in market-based systems only during periods of subdued economic growth or tight liquidity conditions. During economic recoveries we observe an amplifying effect in market-based systems. Thus, the deceleration in credit growth in the above-mentioned countries between 1999 and 2003 was mainly demandside rather than supply-side driven, given the overall slowdown of the economy. Keywords: Bank Lending Pages: 88–97 Year: 2004 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:826f5d84-6e8f-4700-a649-1ee76fa4ef6e/mop_20042_the_role_of_bank_lending_tcm16-19682.pdf File-Format: application/pdf File-Size: 151 kb Handle: RePEc:onb:oenbmp:y:2004:i:2:b:5 Template-Type: ReDIF-Article 1.0 Author-Name: Sylvia Kaufmann Author-Name-First: Sylvia Author-Name-Last: Kaufmann Author-Email: sylvia.kaufmann@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7222 Author-Workplace-Fax: +43-1-40420-7299 Author-Name: Burkhard Raunig Author-Name-First: Burkhard Author-Name-Last: Raunig Author-Email: Burkhard.Raunig@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7219 Author-Workplace-Fax: +43-1-40420-7299 Author-Name: Helene Schuberth Author-Name-First: Helene Author-Name-Last: Schuberth Author-Email: helene.Schuberth@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43(1)404-20-7405 Author-Workplace-Fax: +43(1)404-20-7499 Title: Growth and Stability in the EU Keywords: Conferences Pages: 100–108 Year: 2004 Issue: 2 File-URL: https://www.oenb.at/dam/jcr:964a3937-a47d-4d71-80d5-c3f3fce8806c/mop_20042_growth_and_stability_tcm16-19683.pdf File-Format: application/pdf File-Size: 99 kb Handle: RePEc:onb:oenbmp:y:2004:i:2:b:6 Template-Type: ReDIF-Article 1.0 Author-Name: Gerhard Fenz Author-Name-First: Gerhard Author-Name-Last: Fenz Author-Email: gerhard.fenz@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Divison Author-Workplace-Homepage: http://www.oenb.at Author-Name: Thomas Gruber Author-Name-First: Thomas Author-Name-Last: Gruber Author-Email: Thomas.Gruber@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at Author-Name: Wolfgang Pointner Author-Name-First: Wolfgang Author-Name-Last: Pointner Author-Email: wolfgang.pointner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Subdued Economic Activity in the Euro Area and in Austria despite International Recovery Abstract: At the worldwide level, economic recovery appears to be picking up even more momentum. The U.S. has seen sharp increases in growth given the strong impetus from consumer spending and investment. In Asia, Japan seems to have ended its long period of economic recession, and the Chinese and Southeast Asian economies have continued to expand rapidly. The growth outlook has also improved for Eastern Europe. At the same time, however, economic recovery is still moderate in the euro area, and it appears that the risks have increased more than they have decreased. The positive effects of robust international demand are being offset by the subduing effect of the euro's rally, and domestic demand — especially consumer spending — has recently been less dynamic than expected. However, the inflation outlook is still assessed as favorable. Since the beginning of 2004 inflation in the euro area has been below 2% and is expected to remain at this low level. For Austria, economic development in the first half of 2004 is currently forecast with cautious optimism, although the data recently released for the second half of 2003 clearly did not live up to expectations. This is another reason why the situation in the Austrian labor market is still tight and not expected to improve in the first half of this year. Inflation will remain at its current low level. So far, the most striking event in 2004 has been the May 1 enlargement of the European Union to include ten new Member States. For most of the new members, acceding to the EU represents the climax of a political and economic transformation process, which had begun in 1989 and has generally been highly successful. The enlargement, adding another 74 million people to the EU's population, was also a unique event for the EU itself. In economic terms, we can expect the enlargement to have positive effects on medium-term growth throughout the EU. At the same time, new challenges have arisen regarding the monetary integration of these countries and the redefinition of the EU's policy on neighboring countries (proximity policy). Keywords: Forecast Pages: 6–22 Year: 2004 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:804a5593-f4d9-4a1c-9ff0-338dae477a0f/mop_20041_1_tcm16-6051.pdf File-Format: application/pdf File-Size: 196 kb Handle: RePEc:onb:oenbmp:y:2004:i:1:b:1 Template-Type: ReDIF-Article 1.0 Author-Name: Ernest Gnan Author-Name-First: Ernest Author-Name-Last: Gnan Author-Email: ernest.gnan@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Analysis Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-7400 Author-Name: Jürgen Janger Author-Name-First: Jürgen Author-Name-Last: Janger Author-Email: juergen.janger@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Johann Scharler Author-Name-First: Johann Author-Name-Last: Scharler Author-Email: scharler@sfu.ca Author-Workplace-Name: Simon Fraser University, Department of Economics, 8888 University Drive, Burnaby, B.C., Canada V5A 1S6 Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: (+43-0) 732-2468-8360 Author-Workplace-Fax: (+43-0) 732-2468-9679 Title: Determinants of Long-Term Growth in Austria – A Call for a National Growth Strategy Abstract: This study, which offers a thorough analysis of growth in the past four decades, pinpoints total factor productivity (TFP) and human capital as the main engines of growth in Austria. In a further step it sheds light on the determining factors of TFP against the backdrop of a theoretical framework. The authors present evidence for the importance of innovative activity and human capital. They also examine the role of Austria's institutions involved in economic policy making as well as of economic rules and policies. Austria's dynamic external business is shown to foster productivity; EU enlargement could entail new agglomeration advantages. The study emphasizes the productivity-enhancing role of competition policy and market regulation. In their conclusions, the authors call for a long-term growth strategy for Austria and provide suggestions for such a strategy. Keywords: Growth Strategy Pages: 23–46 Year: 2004 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:e6715fd8-9d2b-4726-af32-0baf334affc1/mop_20041_2_tcm16-6052.pdf File-Format: application/pdf File-Size: 222 kb Handle: RePEc:onb:oenbmp:y:2004:i:1:b:2 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Just Author-Name-First: Christian Author-Name-Last: Just Author-Email: Christian.Just@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at Title: The International Financial Architecture: Official Proposals on Crisis Resolution Abstract: The absence of a clear framework for the resolution of international financial crises introduces many risks and raises legal uncertainties about how to deal with sovereign financial crises. While a fairly broad consensus exists on how to prevent financial crises, namely by strengthening macroeconomic policies and improving financial supervision and regulation, views on how to manage and resolve sovereign debt crises are rather diverse. At the International Monetary Fund's (IMF) annual meeting in Prague in the year 2000, the international community tried to address this issue by advocating the Private Sector Involvement (PSI) initiative. PSI, however, never amounted to more than public statements that lack in substance. Consequently, this led to widespread dissatisfaction among the main participants of the international financial architecture. Debtor countries grew more discontented with the governance of the international financial system, and the private sector started to accuse the IMF of increasing the time inconsistency of its policies. Finally, in November 2001, the Deputy Managing Director of the IMF, Anne Krueger, proposed a legal framework for the resolution of sovereign insolvency crises, a Sovereign Debt Restructuring Mechanism (SDRM). This mechanism would have rendered PSI more operational, in addition to addressing many market failures of today's international financial architecture. This paper addresses some of the key issues related to the international financial architecture and the resolution of sovereign debt crises. It is important to note that while support for an SDRM has waned for the time being, its discussion has nevertheless been beneficial and has produced several tangible results. Keywords: International Financial Architecture Pages: 73–89 Year: 2004 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:b0f88742-da6d-461c-b919-01408a0090ed/mop_20041_3_tcm16-6053.pdf File-Format: application/pdf File-Size: 155 kb Handle: RePEc:onb:oenbmp:y:2004:i:1:b:3 Template-Type: ReDIF-Article 1.0 Author-Name: Helmut Stix Author-Name-First: Helmut Author-Name-Last: Stix Author-Email: helmut.stix@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank, Economic Studies Division Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43(1)404-20-7211 Author-Workplace-Fax: +43(1)404-20-7299 Title: The Impact of ATM Transactions and Cashless Payments on Cash Demand in Austria Abstract: The aims of this study are twofold: to determine the levels of cash inventories held by Austrians and to examine how ATM transactions and cashless payments affect their demand for cash. The key results of this study are based on survey data on the cash withdrawal habits of Austrians aged 14 and over. The results suggest that the cash held by this group of individuals for transaction purposes accounts for only a relatively small share of the total cash in circulation (approximately 10%). Furthermore, it can be seen that individuals who use ATMs withdraw cash more frequently and consequently hold significantly smaller amounts of cash than individuals who do not use ATMs. The study also deals with cashless payments, which were found to have had an impact on the use of cash: the share of cash payments has fallen since 2000 (projections suggest a decline of some 6 to 7 percentage points from 2000 to 2002). This development is attributable primarily to robust growth in debit card transactions. Despite the rise in cashless payments, currently the share of cash payments (in value terms) is likely to be above 70%, so that cash remains by far the most important means of payment in Austria. The results of this study therefore show that ATM transactions and the increased use of cashless payments have had a significant impact on cash demand in Austria and will probably continue to do so in future. Since, however, cash withdrawal and payment habits are unlikely to change overnight, this development should not have much impact on monetary policy. Keywords: ATM transactions, Austria Pages: 90–105 Year: 2004 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:1875e0f2-6f17-42ab-87d7-fa9cf3afa23e/mop_20041_4_tcm16-6055.pdf File-Format: application/pdf File-Size: 174 kb Handle: RePEc:onb:oenbmp:y:2004:i:1:b:4 Template-Type: ReDIF-Article 1.0 Author-Name: Balázs Égert Author-Name-First: Balázs Author-Name-Last: Égert Author-Email: balazs.egert@oecd.org Author-Workplace-Name: Oesterreichische Nationalbank Author-Name: Doris Ritzberger-Grünwald Author-Name-First: Doris Author-Name-Last: Ritzberger-Grünwald Author-Email: doris.ritzberger-gruenwald@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Author-Workplace-Homepage: http://www.oenb.at Author-Workplace-Phone: +43-1-40420-5201 Author-Workplace-Fax: +43-1-40420-5299 Author-Name: Maria Antoinette Silgoner Author-Name-First: Maria Antoinette Author-Name-Last: Silgoner Author-Email: Maria.Silgoner@oenb.at Author-Workplace-Name: Oesterreichische Nationalbank Title: Inflation Differentials in Europe: Past Experience and Future Prospects Abstract: This paper analyzes past and potential inflation differentials for current EU Member States and the acceding countries. Although inflation differentials decreased significantly over the last ten years or so within the EU-15/EU-12 and the acceding countries, they are still on top of the policy agenda. Indeed there are a number of potential causes of inflation differentials. They range from cyclical factors via the exchange rate pass-through and oil price shocks to differences in productivity advances and changes in indirect taxes. Regarding the impact of these factors on inflation, a number of similarities can be found across countries. At the same time, because differences exist, e.g. in the cyclical position, the degree of openness, oil intensity or dependency as well as price and productivity levels, inflation differentials are not likely to vanish completely in the future. We also argue that the often cited catching-up factors, such as the Balassa-Samuelson effect, seem to be considerably weaker than generally believed. In addition, inflation differentials could be clearly associated with inappropriate national fiscal and structural policies. Keywords: inflation differentials Pages: 47–72 Year: 2004 Issue: 1 File-URL: https://www.oenb.at/dam/jcr:fc707d3f-9bb8-407c-bce9-aede14894a1f/mop_20041_inflation_differentials_tcm16-19277.pdf File-Format: application/pdf File-Size: 242 kb Handle: RePEc:onb:oenbmp:y:2004:i:1:b:5