Tenth Presentation of Klaus Liebscher Award

Young Economists Receive Highest OeNB Award for Outstanding Research on European Integration

At the 42nd Economics Conference of the Oesterreichische Nationalbank (OeNB), OeNB President Claus J. Raidl announced the winners of the Klaus Liebscher Award, which was conferred for the tenth time.

This year’s two prize-winning papers, which were selected from numerous excellent submissions, address particularly topical economic policy issues and display outstanding academic quality: “Systemic Sovereign Risk: Macroeconomic Implications in the Euro Area” by Saleem Abubakr Bahaj, University of Cambridge, and “Information Frictions and the Law of One Price: 'When the States and the Kingdom became United’” by Claudia Steinwender, an Austrian economist currently at the London School of Economics.

In his paper, “Systemic Sovereign Risk: Macroeconomic Implications in the Euro Area,” Saleem A. Bahaj analyzes a question that was a topic of great – and sometimes fierce – debate at the height of the European sovereign debt crisis: Are rising risk premia for sovereign borrowing simply a forward-looking signal of the capital market that correctly reflects countries’ macroeconomic weakening? Or is the causality reversed, with risk premia rising for reasons unrelated to macroeconomic conditions but causing an economic downturn and an increase in public debt? Bahaj finds that factors that are not directly related to a country’s macroeconomic situation cause about half the rise in risk premia for sovereign borrowing.

Claudia Steinwender re-examines an old question of international trade theory whose correct resolution has important implications for assessing the social benefits of new information technologies. Does the acceleration of information flows made possible by technological innovation improve the quality of price signals? Steinwender uses statistical data derived from a historic technological achievement: the construction of the first transatlantic telegraph line in the 19th century. The analysis of cotton prices in New York and Liverpool before and after the completion of the cable shows that the quality of price signals improved, benefiting both consumers and manufacturers.

Klaus Liebscher Award

The Klaus Liebscher Award was established in 2005 on the occasion of the 65th birthday of former OeNB Governor Klaus Liebscher in recognition of his commitment to Austria’s participation in Economic and Monetary Union and to the cause of European integration. Every year, one or two papers are chosen for the award, which goes to young economists from EU Member States or EU candidate countries for outstanding scientific papers on Economic and Monetary Union and European integration issues. At EUR 10,000 per paper, the Klaus Liebscher Award is the most prestigious and highest award for scientific achievement the OeNB bestows.