Monetary Policy and the Economy Q3/21

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• Monetary Policy and the Economy Q3/21 (PDF, 2.1 MB) October 2021

Studies and Analyses

• Call for applications: Klaus Liebscher Economic Research Scholarship (PDF, 55 kB) en Oct 14, 2021, 12:00:00 AM

• Nontechnical summaries in English and German (PDF, 94 kB) en Oct 14, 2021, 12:00:00 AM

• Austrian economy growing strongly in mid-2021 (PDF, 449 kB) Fritzer, Schneider, Sellner, Vondra. The Austrian economy continued to recover in mid-2021. In the second quarter, real GDP grew by 3.6% compared with the previous quarter as the easing of containment measures led to significant growth. At the same time, the construction and industry sectors experienced a slowdown. According to leading short-term indicators, strong growth is expected to continue in the third quarter. One of the reasons is that summer tourism might reach its pre-crisis levels much faster than anticipated due to the sharp increase in overnight stays of Austrian, German and Dutch guests. On the other hand, industry climate indicators as well as current export trends show first signs of cooling. Owing to supply bottlenecks and shortages in materials, manufacturing businesses are increasingly struggling to handle large amounts of orders. Compared to Austria, Germany is being hit significantly harder by these bottlenecks because of its position in the supply chain and the fact that the automotive industry plays a more important role in Germany’s economy. Current economic projections point to growth between 3½% and 4% in 2021 and a growth rate of 4% to 5% in 2022. The fourth wave of the COVID-19 pandemic, however, poses a downside risk to the outlook. Following a marked increase of HICP inflation in Austria in the first five months of the year, the inflation rate remained at 2.8% in June and July 2021 and then climbed to 3.2% in August. The rise in inflation measured in 2021 to date was mainly driven by rising energy prices, which accounted for three-fourths of the increase. Close to one-fourth of the rise is attributable to nonenergy industrial goods and food, whereas the latest inflation rate for services was somewhat below the level measured in early 2021. By August, core inflation climbed to 2.5%, 0.5 percentage points beyond the January 2021 value. en Oct 14, 2021, 12:00:00 AM

• How effective were measures introduced in the COVID-19 crisis in supporting household incomes? (PDF, 542 kB) Maidorn, Reiss. We analyze the distributional effects of both, the COVID-19 crisis and the measures introduced to support household incomes, using the microsimulation model developed by the Office of the Fiscal Advisory Council (FISKSIM). In 2020, more than one-third of Austrian households were affected, at least temporarily, by unemployment, short-time work or losses in self-employed income. The fiscal measures to support household incomes clearly cushioned the financial impact of the crisis on households. They proved particularly effective in two ways: First, lower- income households benefited more (vertical effectiveness); second, within individual income brackets, those households that had experienced higher losses due to the COVID-19 shock benefited more strongly from support measures (horizontal effectiveness). This was achieved mostly by the establishment of the hardship fund and one-off payments to unemployed workers. en fiscal stabilization measures, income distribution H53, D30 Oct 14, 2021, 12:00:00 AM

• Treffsicherheit der Maßnahmen zur Stützung der Haushaltseinkommen während der COVID-19-Krise in Österreich (PDF, 559 kB) Maidorn, Reiss. Die vorliegende Studie analysiert die Verteilungswirkungen der COVID-19-Krise sowie der Maßnahmen zur Stützung der Haushaltseinkommen auf Basis des Mikrosimulationsmodells des Büros des Fiskalrats (FISKSIM). Mehr als ein Drittel der österreichischen Haushalte war im Jahr 2020 zumindest temporär von Arbeitslosigkeit, Kurzarbeit oder von Verlusten an Selbstständigeneinkommen betroffen. Die fiskalischen Maßnahmen zur Stützung der Haushaltseinkommen federten die Effekte der Krise deutlich ab. Zudem wiesen diese insgesamt in zweifacher Hinsicht eine gute Treffsicherheit auf: Niedrigere Einkommen profitierten relativ stärker (vertikale Treffsicherheit), während innerhalb der verschiedenen Einkommensgruppen jene Haushalte stärker profitierten, die durch den COVID-19-Schock stärkere Verluste erlitten hatten (horizontale Treffsicherheit). Dies liegt vor allem am Härtefallfonds sowie an den Einmalzahlungen an Arbeitslose. de Oct 14, 2021, 12:00:00 AM

• Corporate equity finance in Austria – impediments and possible improvements (PDF, 989 kB) Breyer, Endlich, Huber, Oswald, Prenner, Reiss, Schneider, Waschiczek. This study examines the state of play of equity financing in Austria and highlights challenges Austrian companies face in raising equity capital. The equity ratios of Austrian companies had been improving steadily before the onset of the COVID-19 pandemic, which has been weighing considerably on corporate equity levels. The decrease of equity levels would, however, be about twice as high in the absence of the support measures taken to alleviate the economic effects of the pandemic. The bulk of Austrian companies’ equity is sourced from the rest of the world, while the domestic financial sector plays only a minor role in providing equity funding. Impediments to raising capital externally include business owners’ reluctance to share control with external investors, information deficits and data gaps as well as differences in the tax treatment of debt and equity (“debt bias”). Equity supply is limited because investors lack information on the economic situation of capital-seeking companies and because investments in unlisted companies are less liquid. Together with representatives of national and international institutions and market participants, we identified ways to strengthen the equity base of Austrian companies. Cases in point are providing both tax incentives and intermediation support for equity finance and establishing public-private partnerships. en corporate finance, equity, institutional investors E61, G1, G2, G32 Oct 14, 2021, 12:00:00 AM

• Eigenkapitalausstattung österreichischer Unternehmen – Hindernisse und Handlungsoptionen (PDF, 878 kB) Breyer, Endlich, Huber, Oswald, Prenner, Reiss, Schneider, Waschiczek. Diese Studie untersucht die aktuelle Entwicklung und bestehende Hemmnisse in der Eigenkapitalfinanzierung österreichischer Unternehmen. Nach einer Verbesserung in den Jahren vor der Pandemie dürfte sich die Eigenkapitalquote der Unternehmen im Zuge der COVID-19-Pandemie auch unter Berücksichtigung aller derzeit bekannten Hilfsmaßnahmen deutlich reduzieren – ohne Hilfsmaßnahmen würde sie allerdings doppelt so stark sinken. Die Eigenkapitalaufbringung der österreichischen Unternehmen erfolgt zu einem wesentlichen Teil aus dem Ausland, während der Anteil des Finanzsektors relativ gering ist. Nachfrageseitige Hemmnisse der Eigenkapitalaufnahme umfassen etwa die Ablehnung der Einflussnahme durch externe Investoren, Informations- und Datendefizite seitens der Unternehmen und die steuerliche Diskriminierung von Eigenkapital gegenüber Fremdkapital. Das Angebot von Eigenkapital wird durch Informationsdefizite bezüglich der wirtschaftlichen Lage kapitalsuchender Unternehmen und die geringe Liquidität von Beteiligungen an nicht börsennotierten Unternehmen beeinträchtigt. Als Möglichkeiten zur Stärkung der Eigenkapitalbasis von Unternehmen in Österreich werden – basierend auf Gesprächen mit Expertenorganisationen und Marktteilnehmern – steuerliche Fördermaßnahmen, Investitionen in Eigenkapital durch Intermediäre sowie staatliche Unterstützungsmaßnahmen identifiziert. de Unternehmensfinanzierung, Eigenkapital, institutionelle Investoren E61, G1, G2, G32 Oct 14, 2021, 12:00:00 AM

• The impact of climate change on monetary policy (PDF, 344 kB) Breitenfellner, Pointner. The challenges of climate change will affect all areas of economic policy, including monetary policy. Rising temperatures, extreme weather events and the political, social and technological responses to climate change may have significant effects on prices, output, productivity or credit markets. Central banks need to reflect these effects in their assessment of risks to price stability, their projections of economic developments and their analyses of financial markets. The mandate of the Eurosystem defines price stability as the primary objective of monetary policy, but it also mentions the support of general EU economic policies, including those aiming at environmental protection. In this contribution, we describe the implications of climate change for price stability, for the future conduct of monetary policy and for central banks’ balance sheets. While monetary policy may play a role among the possible economic policy reactions to climate change, we contrast this role with more effective policy responses. Monetary policy has several instruments at its disposal: changes in the collateral framework, asset purchases and disclosure of climate-related information. Monetary policy implementation is subject to operational constraints, e.g. the principle of market neutrality, which need, however, to be balanced against central bank objectives and must take market inefficiencies into account. Our considerations square well with the ECB’s recently presented action plan to include climate change considerations in its monetary policy strategy. en Climate change, carbon transition, monetary policy, central banks, Eurosystem E52, Q54 Oct 14, 2021, 12:00:00 AM

• Gender, money and finance (PDF, 161 kB) Niederländer, Ritzberger-Grünwald, Turner-Hrdlicka. 48th OeNB Economics Conference in cooperation with SUERF and the JVI (May 20/21, 2021) en Oct 14, 2021, 12:00:00 AM