Monetary Policy and the Economy Q3/20

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• Monetary Policy and the Economy Q3/20 (PDF, 3,5 MB) November 2020

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• Call for applications: Klaus Liebscher Economic Research Scholarship (PDF, 69 kB) en 30.11.2020, 00:00:00

• Nontechnical summaries in English and in German (PDF, 97 kB) en 30.11.2020, 00:00:00

• Rising infection rates threaten to derail economic recovery (PDF, 588 kB) Fenz, Fritzer, Glatzer, Schneider, Stix, Vondra. Economic activity in Austria has been sharply curbed by the ongoing COVID-19 pandemic. During the first-wave lockdown, the OeNB’s weekly GDP indicator registered a decline of economic output by one quarter. After the exit from lockdown, the GDP gap narrowed very rapidly, amounting to –3½% compared to previous year levels in the first half of October. Among the hardest-hit sections of the economy, tourism benefited from markedly stronger domestic demand during the summer, which limited the year-on-year decline in overnight stays to 15% in July and August. Meanwhile, the travel alerts newly issued by a number of countries for Austria since mid-September have been taking their toll, though. For October, real-time data on card payments already point to a 40% decrease in overnight stays. In contrast, export performance has been improving, mirroring the slight upward trend in the production sector. By September, the decline in goods exports had dropped to a small percentage according to the OeNB’s export indicator. Looking ahead, the ongoing rapid rise in infection rates constitutes downside risks to growth, however. While the GDP forecasts for 2020 (about –7%) are fairly solid given strong third-quarter performance, the recovery projected for 2021 may turn out to be below the range currently expected (+4½ to +5%). The recovery in the labor market has already been slowing down. Registered unemployment exceeded the year-earlier mark by 71,000 unemployed individuals by mid-October and thus a mere 30% of the peak measured in April, but unemployment has been shrinking at a decreasing pace. The early warning system for impending layoffs implemented by Public Employment Service Austria points to more layoffs coming in the weeks ahead. Inflation has been highly volatile in 2020 so far, reflecting energy price fluctuations as well as one-off effects (fashion clearance sales started later usual) and price measurement problems. In September, HICP inflation came to 1.3%. In line with the OeNB’s inflation forecast of September 2020, HICP inflation is expected to run to 1.4% in 2020 and to climb to 1.7% in 2021. en 30.11.2020, 00:00:00

• Financial literacy in Austria – focus on millennials (PDF, 946 kB) Fessler, Jelovsek, Silgoner. This article summarizes the main findings from the second wave of the Austrian Survey of Financial Literacy (ASFL), the Austrian contribution to the OECD/INFE survey on adult financial literacy, which was conducted in spring 2019. As compared to the previous survey round in 2014, the financial knowledge of Austrian residents seems to have increased significantly. While men outperform women in terms of financial knowledge, they score slightly worse in terms of financial behavior and attitudes. Austrian residents are rather prudent, risk averse and forward looking and have a good overview of their finances.
  In general, financial literacy is rather equally distributed across age groups. However, 15- to 38-year-olds (hereinafter called millennials) differ from other age cohorts in several respects: They have relatively low levels of financial literacy, are less financially organized, and they show more risky and less forward looking behavior. At the same time, they are more open to digital means of payments and financial innovations in general. Even though the observed differences are not very large and may vanish as millennials mature and gain experience with business and finance, we deem it important to monitor the financial literacy development for this group, given the rising complexity of financial decisions many among this group will face and the tremendous financial resources they will ultimately inherit. en financial literacy, financial education, financial stability, survey data A20, D12 30.11.2020, 00:00:00

• A spatial analysis of access to ATMs in Austria (PDF, 1,5 MB) Stix. This paper sheds light on the geographical distribution of automated teller machines (ATMs) in Austria. Our results indicate that Austrians live within a travel distance of 1.2 km on average of an ATM, with travel times (by car) to the closest ATM averaging 2.9 minutes. A total of 82% of the population reside within a travel distance of 2 km of an ATM and 85% of the population travel less than 5 minutes to reach the next ATM. When comparing ATM access in urban and rural areas, we find that the average distance to the closest ATM ranges from 2.1 km in municipalities with less than 2,000 inhabitants to 0.6 km in larger cities.
  Although our findings generally point to reasonable travel distances, on average, across Austria, a more disaggregated view allows us to identify areas where ATM access is more limited. 2.9% of the population (or some 260,000 residents) have to travel more than 5 km to reach the closest ATM. About 60% of these residents live in municipalities with less than 3,000 inhabitants and 80% in municipalities with less than 5,000 inhabitants. Municipalities with a high share of residents who have a travel distance of more than 5 km can be found in all of Austria’s nine provinces (except Vienna). These municipalities have on average 840 inhabitants. en ATM network, cash access points, spatial analysis R12, E51, E41 30.11.2020, 00:00:00

• A new long-run consumer price index for Austria (1800–2018) (PDF, 782 kB) Hubmann, Jobst, Maier. Indices of the development of consumer prices in Vienna or Austria date back to the year 1800. This article presents the first systematically documented and chained consumer price index for Austria spanning the period from 1800 to today. The selection of the series and the problems that arise in chaining them through wars, currency reforms and changes in index methodology are discussed in detail. We also propose adjustments to the constituent series which, compared to previously used series, yield significantly higher inflation rates during the Napoleonic Wars and a more pronounced deflation after their end, as well as a steeper price increase in 1948 and 1949. Finally, this article will examine the suitability of consumer price indices for the conversion of historical prices. This article includes a table containing annual index values. Monthly series are available online. en cost-of-living index, consumer price index, Austria, historic reconstruction, inflation C82, E31, N13, N14 30.11.2020, 00:00:00