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Macroeconomics and European Economic Policy

WIFO publications (5456 hits)

WIFO Bulletin, 2020, 25(6), pp.45-58
Online since: 11.08.2020 0:00
 
The measures adopted to contain the COVID-19 pandemic give rise to a recession in Austria. With a slump by 7.0 percent year-on-year, demand and output will contract even more sharply in 2020 than during the economic and financial market crisis of 2008-09. Since the trough now appears to have been passed, the recession promises to be short. Nevertheless, GDP will still not be back to its pre-crisis level by the end of the projection horizon (end of 2021).
By means of stochastic volatility in the mean model to allow for time-varying parameters in the conditional mean and quarterly data for the G7 countries, this article examines the dynamic nexus between the volatility of output and economic growth for the G7 countries. This approach allows us to model parameter time-variation so as to reflect changes in the effect of volatility appearing in both the conditional mean and the conditional variance. The evidence in this article indicates that the effect of output volatility on output growth is strongly time-varying and quite analogous for all the G7 countries, with a break around 1973. The effect of output volatility on growth becomes more negative after 1973, with negative and statistically significant estimates after 1973 or the early 1990s. Our estimates show a reversal of the declining trend and a significant increase in output volatility in the late 2000s, indicating that the Subprime Crisis brought a temporary break in the Great Moderation. However, the Great Moderation seems to be generally restored by the mid-2010s. The effect of output growth on output volatility is insignificant for all countries except for Italy and the USA, for which the estimates are positive and statistically significant. Our estimates also show that output volatility is counter-cyclical for all countries.
A major goal of the European Commission in the area of direct taxation is the introduction of a common consolidated corporate tax base in Europe (CCCTB). While hardly discussed in the literature, such a system would limit national discretion over tax depreciation. In a sample of up to 47 countries, we find that the probability of a tax reform that improves the depreciation allowances increases, if the macroeconomic situation is weak. This suggests that changes in depreciation allowances are used as a fiscal instrument for stabilisation. A common consolidated tax base deprives national governments from implementing investment incentives via accelerated depreciation. This paper discusses the possible implementation of a hybrid system that combines features of formula apportionment and separate accounting. Such a hybrid system may substantially mitigate transfer pricing problems and other tax planning issues, whilst preserving national discretion over depreciation allowances.
Empirica, 2020, 47(3), pp.543-577, http://www.springer.com/10663
This study analyses and compares the dynamics of intra-European Monetary Union and intra-non-EMU, EU stock markets' return spillover during European Sovereign Debt Crisis (2 November 2009 to 30 December 2016). Diebold and Yilmaz's (Int J Forecast 28(1):57-66, 2012) spillover index, Barunik's et al. (J Int Money Finance 77:39-56, 2017) spillover asymmetry measures, and Barunik and Krehlík's (J Financ Econ 16(2):271-296, 2018) frequency connectedness methodologies are applied for analysis. The findings of this study indicate that intra-EMU stock market return spillover was higher than the intra-non-EMU EU stock markets' return spillover during the crisis period. It is also identified that the intra-EMU stock market return spillover is more responsive to global and domestic economic and financial events than to the intra-non-EMU EU stock markets' return spillover. France was identified as the most integrated and Slovakia the least integrated among the EMU stock markets. Among the non-EMU EU stock markets, Sweden was identified as the most integrated and Bulgaria as the least integrated stock market with other non-EMU EU stock markets. The presence of asymmetry in the return spillover for both EMU and non-EMU, EU stock markets was also revealed. It was also found that return spillover among the EMU and non-EMU, EU stock market is dominated over higher frequencies and that stock markets in these economies analyse information rapidly to incorporate it into stock prices. The findings of the study provide significant implications for researchers, academician and policy-makers. Knowledge regarding the dynamics of return spillover among the investigated stock markets will allow investors to formulate their portfolio diversification strategies in a better and informed manner.
Empirica, 2020, 47(3), pp.453-473, http://www.springer.com/10663
The paper addresses the issue of convergence with the EU for nine countries: Albania, Bosnia and Herzegovina, Georgia, Moldova, Serbia, the Former Yugoslav Republic of Macedonia, Turkey, Montenegro and Ukraine. They are all at different stages of EU candidacy which could eventually lead to full membership. Some are officially recognised as candidate countries while others are at the stage of an association agreement. The presence of convergence is examined in terms of two macroeconomic indices: GDP per capita and GDP per person employed. Panel unit root tests as well as univariate unit root tests are estimated for the period 1997-2016. In broad terms, the empirical findings reported herein indicate a lack of convergence with the EU irrespective of the metric used. However, they indicate a process of in-group convergence mostly in terms of GDP per person employed.
 
Austria's economic output fell sharply and on a broad basis in the first quarter of 2020 due to the measures taken to contain the COVID-19 pandemic. Although companies continue to assess the current situation unfavourably, expectation indicators improved.
 
The global economy was hit strongly by the effects of the COVID-19 related restrictions imposed worldwide to contain the pandemic. Initial data already show a decline in GDP in all major economic regions in the first quarter. Confidence indicators deteriorated to a level similar to that during the financial market crisis in 2008-09. In Austria, too, economic output already declined in the first quarter. Consumption as well as accommodation and food service activities, transportation, wholesale and retail trade, repair of motor vehicles and motorcycles and other service activities were particularly affected. After rising strongly within two weeks at the end of March, unemployment continued to rise in April, albeit at a slower pace. Inflation fell in March.
Erholung der Konjunktureinschätzungen nimmt Gestalt an. Ergebnisse des WIFO-Konjunkturtests vom Juli 2020 (Recovery of Economic Expectations is Taking Shape. Results of the WIFO Business Cycle Survey July 2020)
WIFO Business Cycle Survey, 2020, (7), 11 pages
Supported by: European Commission, DG Economic and Financial Affairs
Study by: Austrian Institute of Economic Research
Online since: 30.07.2020 14:00
Der WIFO-Konjunkturklimaindex liegt im Juli trotz eines deutlichen Anstieges (+5,9 Punkte) mit –15,0 Punkten weiter auf einem Niveau, das zuletzt in der Finanzmarkt- und Wirtschaftskrise 2008/09 erreicht wurde. Die österreichischen Unternehmen schätzen die aktuelle Konjunktur weiterhin pessimistisch ein, allerdings nimmt die Verbesserung der Erwartungen deutlicher Gestalt an. In der Bauwirtschaft sind die Unternehmen wesentlich zuversichtlicher als in der Sachgütererzeugung und den Dienstleistungen.
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