Datei:

fileadmin/Documents/Publikationen/Studienpool_II/Studien_2010_adapted_file_names/02.ExecutiveSummary.Yegorov.A_Land_Far_Away.pdf

Abstract: What goods to export and where to sell them? Our research was pursuing these two major goals. The first one is related to detecting countries where Austria has good perspectives for boosting its export. The basic idea was to use macroeconomic data set detecting the significant variables. We found that besides the GDP of importer and distance, there are more important variables like being landlocked, language, inflation, and so forth. We found recent GDP growth rate to be non-significant in more than just the very basic models. Taking all explanatory variables into account we could calculate the country-effects, telling us how Austrian exporters are under or over-represented within each country. It is argued that exporters could put additional efforts into quickly growing countries where Austria is still under-represented. The second goal was a more detailed view on the role of transport costs. Gravity model was shown to be correct and robust (even for a class of functions of distance). The detailed accounting for transport costs requires consideration of different transport modes and ratios of value to weight. Distance suppresses trade of cheap goods most, suggesting that Austria has no disadvantage in export of high-tech goods (like pharmaceutics and complex machines) over long distances. In particular, pharmaceutical sector has growing potential and trade with Russia is one of its perspectives.

Abstract: What goods to export and where to sell them? Our research was pursuing these two major goals. The first one is related to detecting countries where Austria has good perspectives for boosting its export. The basic idea was to use macroeconomic data set detecting the significant variables. We found that besides the GDP of importer and distance, there are more important variables like being landlocked, language, inflation, and so forth. We found recent GDP growth rate to be non-significant in more than just the very basic models. Taking all explanatory variables into account we could calculate the country-effects, telling us how Austrian exporters are under or over-represented within each country. It is argued that exporters could put additional efforts into quickly growing countries where Austria is still under-represented. The second goal was a more detailed view on the role of transport costs. Gravity model was shown to be correct and robust (even for a class of functions of distance). The detailed accounting for transport costs requires consideration of different transport modes and ratios of value to weight. Distance suppresses trade of cheap goods most, suggesting that Austria has no disadvantage in export of high-tech goods (like pharmaceutics and complex machines) over long distances. In particular, pharmaceutical sector has growing potential and trade with Russia is one of its perspectives.

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Datei:	fileadmin/Documents/Publikationen/Studienpool_II/Studien_2010_adapted_file_names/02.ResearchReport.Grohall.Yegorov.A_Land_Far_Away.pdf

Abstract: What goods to export and where to sell them? Our research was pursuing these two major goals. The first one is related to detecting countries where Austria has good perspectives for boosting its export. The basic idea was to use macroeconomic data set detecting the significant variables. We found that besides the GDP of importer and distance, there are more important variables like being landlocked, language, inflation, and so forth. We found recent GDP growth rate to be non-significant in more than just the very basic models. Taking all explanatory variables into account we could calculate the country-effects, telling us how Austrian exporters are under or over-represented within each country. It is argued that exporters could put additional efforts into quickly growing countries where Austria is still under-represented. The second goal was a more detailed view on the role of transport costs. Gravity model was shown to be correct and robust (even for a class of functions of distance). The detailed accounting for transport costs requires consideration of different transport modes and ratios of value to weight. Distance suppresses trade of cheap goods most, suggesting that Austria has no disadvantage in export of high-tech goods (like pharmaceutics and complex machines) over long distances. In particular, pharmaceutical sector has growing potential and trade with Russia is one of its perspectives.

Abstract: In this paper, we develop a politico-economic model to analyze the relationship between the mode of international investment and institutional quality in a non-democratic capital importing country. Foreign investors from a capital-rich North can either purchase productive assets in a capital-poor South and transfer their capital within integrated multinational firms or they can form joint ventures with local asset owners. The South is ruled by an autocratic elite that may use its political power to expropriate productive assets. In a joint venture, the domestic asset owner bears the risk of expropriation, whereas in an integrated firm, this risk affects the foreign investor. This effect lowers the incentives for specific investments in an integrated firm and distorts the decision between joint ventures and integrated production. By setting the institutional framework in the host country, the elite influences the risk of expropriation. We determine the equilibrium risk of expropriation in this framework and the resulting pattern of international production. We also analyze as to how globalization, which is reflected in a decline in investment costs, influences institutional quality.

Abstract: FIW publishes quarterly FIW Notes. They present an overview of the most important Austrian and international developments regarding international economics. There is only a German version available.

Datei:

fileadmin/Documents/Publikationen/Working_Paper/N_065-Hossfeld.pdf

Abstract: We follow the behavioral equilibrium exchange rate approach by Clark and MacDonald (1998) to derive equilibrium real effective exchange rates and currency misalignments for the US and its 16 major trading partners. We apply cointegration and panel cointegration techniques to derive fully countryspecific measures of misalignment and measures based on panel estimates. We formally test the forecast performance of pooled vs. heterogeneous estimators over a hold-back period and find that pooling the data delivers more accurate forecasts in the vast majority of cases although the implicit long-run homogeneity restriction is statistically rejected. This is especially remarkable, since we have given the heterogeneous estimator an ’unfair’ advantage by choosing the country-specific model (of up to 21 possible ones) with the best out-of-sample performance prior to comparing it to two final panel specifications. Robustness of the results is supported by recently introduced cross-sectionally augmented panel unit root tests by Pesaran (2007) and bootstrapped error correction-based panel cointegration tests by Westerlund (2007), as well as different estimators. While we find strong evidence for the Balassa-Samuelson-effect, the evidence for other commonly hypothesized fundamentals is weak.

Abstract: The real interest parity (RIP) condition combines two cornerstones in international finance, uncovered interest parity (UIP) and ex ante purchasing power parity (PPP). The extent of deviation from RIP is therefore an indicator of the lack of product and financial market integration. This paper investigates whether the nominal exchange rate regime has an impact on RIP. The analysis is based on 15 annual real interest rates and covers a long time span, 1870-2006. Four subperiods are distinguished and linked to fixed and flexible exchange rate regimes: the Gold Standard, the interwar float, the Bretton Woods system and the current managed float. Panel integration techniques are applied to increase the power of the tests, where cross section correlation is embedded via common factor structures. The results suggest that RIP holds as a long run condition irrespectively of the nominal exchange rate regime. However, adjustment towards RIP is affected by both the institutional framework and the historical episode. Half lives of shocks tend to be lower under fixed exchange rates and in the first part of the sample. Although barriers to trade and capital controls have been removed, they did not lead to lower half lives during the managed float.

Abstract: Despite its popularity, the United Nations' Human Development Index (HDI) only addresses simplistically, if at all, issues of inequality, intended either across dimensions or across units (or both). To overcome this problem, the weighted arithmetic average can be replaced, in the aggregation steps, by more sophisticated non-linear functions, often given by suitable generalised means, that impose penalizations for inequalities; this is done (more or less explicitly) in the literature, as well as in the 2010 edition of the Human Development Report (HDR). Besides other basic properties that aggregation functions are expected to satisfy, the following additional two appear relevant: the function must be defined for every set of values of variables (including high or negative), and the compensability among variables must be incomplete. Furthermore, a choice must be allowed among three different kinds of penalisations: one that only depends on the differences of variables (called "constant penalisation" here); one that, for given such differences, increases--and one that decreases--when the absolute levels of variables increase. These features were not discussed previously in the literature and are not fulfilled, for instance, by the Inequality Adjusted HDI of the 2010 HDR. Nevertheless, these features do hold for a suitable explicit generalised mean introduced here. Such an aggregation function is then applied to a database of 32 developing or developed countries, thereby resulting in significant rating and ranking variations with respect to the HDI, especially in the non-constant penalisation cases. Moreover, there is a negative correlation between the HDI and the penalisation value (that can be regarded as a penalization index in itself), both in terms of rating and ranking.

Abstract: This paper compares nine common specialization indices, discussing their properties, strengths and weaknesses. In order to unravel the differences between the indices they are applied to European employment structures in 2005, spanning 51 industries and 24 European countries. The resulting heterogeneity levels differ largely between relative and absolute specialization measures, but also within these two groups of indices. As results are highly dependent on which measure is employed, it is important to be aware of carefully choosing appropriate indices in empirical studies in order to attain appropriate conclusions and conduct sound economic policy.

Abstract: We analyse a world consisting of ’the North’ and ’the South’ where labour standards in the North are set by trade unions. Standards set by unions tend to increase output and welfare. There are no unions in the South and work standards are suboptimal. Trade between these two countries can imply a reduction in work standards in the North. Moreover, when trade unions are established in the South, the North, including northern unions, tends to lose out. Quantitatively, these effects are small and overcompensated for by gains in the South. The existing empirical literature tends to support our findings.

Abstract: Employing the Pedroni co-integration technique and the GMM estimator, this paper aims at investigating the possible connection between financial development, financial openness and trade openness in twenty-nine Asian developing countries over 1994-2008. Firstly, we find a bidirectional causality between trade openness and financial development/openness. Secondly, the relationship between financial development and financial openness is heterogeneous across different measures. Finally, this paper provides a complementary contribution to earlier studies as asking for the question of whether the inclusion of financial crisis in estimated models can change the nature of the relationship between financial development and both types of openness.

Datei:

fileadmin/Documents/Publikationen/Policy_Briefs/08.FIW_Policy_Brief.Kohler.pdf

Abstract: Zwischen der ökonomischen Theorie und der praktizierten Handelspolitik besteht ein gespanntes Verhältnis. Häufig wird der Theorie unterstellt, sie predige einseitig und unverantwortlich Freihandel, andererseits scheint die Politik diesem Rat ohnehin massiv zu widersprechen. Praktiziert wird ja nicht Freihandel, sondern ein Gemisch aus Importprotektion und Exportsubventionierung, und Handelsliberalisierung gestaltet sich oft als schwieriger und langwieriger Prozess. Erklärbar ist diese Politik im Detail nur durch die Besonderheiten, wenn man so will das Versagen, des politischen Prozesses. Was besagt die „Lehre vom Freihandel“ wirklich? Wie sieht die Rhetorik, wie die Praxis der Handelspolitik aus? Warum ist die Politik so, wie sie ist? Kann man die starke Zunahme des Welthandels nach dem zweiten Weltkrieg, verbunden mit insgesamt doch beeindruckendem Wirtschaftswachstum, als Erfolgsgeschichte des GATT und der WTO interpretieren? Gehört die Zukunft dem multilateralen Welthandelssystem oder einem Geflecht von regionalen Handelsblöcken?

Abstract: This paper examines the transmission of GDP growth and GDP growth volatility among the G7 countries over the period 1960 q1 - 2009 q3, using a multivariate generalized autoregressive conditional heteroskedasticity (MGARCH) model to identify the source and magnitude of spillovers. Results indicate the presence of positive own-country GDP growth spillovers in each country and of cross-country GDP growth spillovers among most of the G7 countries. In addition, the large number of significant own-country output growth volatility and cross-country output growth volatility spillovers indicates that output growth shocks in most of the G7 countries affect output growth volatility in the remaining others. An additional finding is that U.S. is the dominant source of GDP growth volatility transmission, as its volatility exerts a significant unidirectional spillover to all remaining G7 countries.

Abstract: The aim of this paper is to empirically examine the effect of a regime switch, from exchange-rate targeting (fixed exchange rate) to inflation targeting, on monetary policy in developing economies, hence adding to evidence on whether inflation targeting along with a managed float provides a better monetary policy compared to exchange-rate targeting. For this purpose, a group of developing countries that have historically experienced such a switch is analysed. This is done by an augmented interest-rate rule a-la Taylor (1993; 2001). Two methodological approaches are used: switching regression and Markov-switching method. Although both approaches have different drawbacks which compensate, still both lead to the conclusion that inflation targeting represented a real switch in developing countries. The period of inflation targeting was characterized by: a more stable economic environment; by more independent monetary-policy conduct; and by strict focus on inflation. Estimates suggest that the switch to a new monetary regime explains these results.

Datei:

fileadmin/Documents/Publikationen/Policy_Briefs/09.FIW_Policy_Brief.KlimakonferenzCancun.pdf

Abstract: Im Rahmen der Klimarahmenkonvention der UNO treffen die Vertragsstaaten zu ihren Verhandlungen (Conference of Parties, COP 16) von 29. November bis 10. Dezember 2010 in Cancun, Mexiko zusam-men. Die naturwissenschaftlichen Grundlagen für die Szenarien des Klimawandels haben sich über die letzten Jahre weiter erhärtet und weisen auf die Notwendigkeit einer umfassenden Reduktion der Treibhausgasemissionen hin – einer Reduktion um ein Vielfaches der im Kyoto-Vertrag vereinbarten Ziele und unter Einbeziehung von wesentlich mehr als der damaligen Vertragsstaaten. Die Vorgänger-Vertragsstaaten-Konferenz in Kopenhagen 2009 markierte eine fundamentale Änderung in der inter-nationalen Klimapolitik-Architektur, statt völkerrechtlich verbindlichen gemeinsamen Zielen dürfte es nun den einzelnen Staaten überlassen bleiben welche Handlungen sie setzen. Einzelstaatliche Klimapolitik läuft ohne gemeinsame Ziele aber Gefahr mit wesentlichen Wettbewerbseffekten im internatio-nalen Handel verbunden zu sein. Für einige Wirtschaftssektoren zeichnen sich technologische Quan-tensprünge für „Low Carbon“ Strukturen ab. Für andere Sektoren werden globale sektorale Treibhaus-gas-Abkommen diskutiert. Vorschläge liegen insbesondere aber auch für Border Tax Adjustments vor, um potenziell nachteiligen Wettbewerbseffekten vorzubeugen. Die Interessenlage der Verhandlungsstaaten ist dabei durchaus komplex.

Datei:

fileadmin/Documents/Publikationen/Studienpool_II/01.ExecutiveSummary.Treitler.Berrer.Wasserströme_internationaler Handel.pdf

Abstract: The amount of water embodied in Austrian imports of selected agricultural products is quantified. These imports are analysed by a dynamic model that is based on the water footprint concept. The model quantifies the water savings potential using a database including more than 200 countries and regions. Austria could save up to 28% of the water embodied in coffee by substituting the current coffee imports from water inefficient countries by efficiently produced coffee. The water savings potential from wheat imports amounts to 22% that from orange imports equals almost 20% of the current amount of embodied water. We calculate a global water value equal to € 0.013 per cubic meter of water. The international trade of coffee, wheat and oranges trades embodied water equal to € 51.6 billions per year with a share of 92.6% (€ 47.8 billions) traded at commodity exchanges.

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Datei:	fileadmin/Documents/Publikationen/Studienpool_II/Studien_2010_adapted_file_names/01.ResearchReport.Treitler.Berrer.Wasserstroeme_internationaler_Handel.pdf

Abstract: The amount of water embodied in Austrian imports of selected agricultural products is quantified. These imports are analysed by a dynamic model that is based on the water footprint concept. The model quantifies the water savings potential using a database including more than 200 countries and regions. Austria could save up to 28% of the water embodied in coffee by substituting the current coffee imports from water inefficient countries by efficiently produced coffee. The water savings potential from wheat imports amounts to 22% that from orange imports equals almost 20% of the current amount of embodied water. We calculate a global water value equal to € 0.013 per cubic meter of water. The international trade of coffee, wheat and oranges trades embodied water equal to € 51.6 billions per year with a share of 92.6% (€ 47.8 billions) traded at commodity exchanges.

Datei:

fileadmin/Documents/Publikationen/Studienpool_II/01.PolicyNote.Treitler.Berrer.Wasserströme_internationaler Handel.pdf

Abstract: The amount of water embodied in Austrian imports of selected agricultural products is quantified. These imports are analysed by a dynamic model that is based on the water footprint concept. The model quantifies the water savings potential using a database including more than 200 countries and regions. Austria could save up to 28% of the water embodied in coffee by substituting the current coffee imports from water inefficient countries by efficiently produced coffee. The water savings potential from wheat imports amounts to 22% that from orange imports equals almost 20% of the current amount of embodied water. We calculate a global water value equal to € 0.013 per cubic meter of water. The international trade of coffee, wheat and oranges trades embodied water equal to € 51.6 billions per year with a share of 92.6% (€ 47.8 billions) traded at commodity exchanges.

Datei:

fileadmin/Documents/Publikationen/Kurzbericht/Kurzbericht_IV_Quartal_2010_01.pdf

Abstract: FIW publishes quarterly FIW Notes. They present an overview of the most important Austrian and international developments regarding international economics. There is only a German version available.

Abstract: Based on the empirical firm growth literature and on heterogeneous (microeconomic) adjustment models, this paper empirically investigates the impact of European industry fluctuations and domestic business cycles on the growth performance of European firms. Since the implementation of the Single market program (SMP) the EU 27 member states share a common market. Accordingly, the European industry business cycle is expected to become a more influential predictor of European firms' behavior at the expense of domestic fluctuations. Empirically, the results of a two-part model for a sample of European manufacturing firms reject this hypothesis. Additionally, subsidiaries of Multinational Enterprises (MNEs) constitute the most stable firm cohort throughout the observed business cycle.

Datei:

fileadmin/Documents/Publikationen/Policy_Briefs/07.FIW_PolicyBrief.Reform_der_Finanzmärkte_final.pdf

Abstract: Dass Krisen unserem Wirtschaftssystem immanent sind, hat ihre aktuellste Ausprägung eindrucksvoll in Erinnerung gerufen. Weil Finanzkrisen häufiger und intensiver geworden sind, müssen nun möglichst rasch umfassende Maßnahmen zur Beseitigung der tieferen Ursachen der Krise getroffen werden. Zentraler Ansatzpunkt dafür ist eine Reform der Finanzmärkte und ihres Regulierungsrahmens. Der poli-tische Prozess zur globalen Reform der Finanzmärkte wird von der Gruppe der 20 wichtigsten Industrie- und Schwellenländer (G-20) vorangetrieben. In der Europäischen Union erfolgt die Umsetzung nach zwischen allen Mitgliedsländern gemeinsam abgestimmten Vorgaben. Dabei sind insbesondere drei umfassende Bereiche von Bedeutung: (i) eine neue Qualität für die makroprudenzielle Perspektive des Finanzmarktgeschehens, (ii) eine neue institutionelle Struktur der Finanzmarktaufsicht in Europa sowie (iii) Maßnahmen auf der mikroprudenziellen Ebene. Generelles Ziel aller Reformbemühungen ist die Schaffung eines leistungsfähigen, aber belastbareren und krisenfesteren Systems. Dazu müssen sowohl die Widerstandsfähigkeit der einzelnen Bank als auch des Systems als Ganzes gestärkt werden. Da sich Regulierung und Aufsicht stets in einem „interessenspolitischen Umfeld“ bewegen, bleibt abzuwarten, inwieweit die schlussendlich umgesetzten Reformen von diesen Einflüssen geprägt sein wer-den. Eine finale Lösung der Krisenproblematik für alle Zukunft wird es trotzdem nicht geben können. Vielmehr werden Regulierung und Aufsicht immer wieder an Veränderungen anzupassen sein.

Abstract: We analyse the dynamics of the standard deviation of demand shocks and of the demand component of GDP across countries in the European Monetary Union (EMU). This analysis allows us to evaluate the patterns of cyclical comovement in EMU and put them in contrast to the cyclical performance of the new members of the EU and other OECD countries. We use the methodology put forward in Crespo-Cuaresma and Fernández-Amador (2010), which makes use of sigma-convergence methods to identify synchronization patterns in business cycles. The Eurozone has converged to a stable lower level of dispersion across business cycles during the end of the 80s and the beginning of the 90s. The new EU members have also experienced a strong pattern of convergence from 1998 to 2005, when a strong divergence trend appears. An enlargement of the EMU to 22 members would not decrease its optimality as a currency area. There is evidence for some European idiosyncrasy as opposed to a world-wide comovement.

Abstract: We propose the analysis of the dynamics of the standard deviation of business cycles across euro area countries in order to evaluate the patterns of cyclical convergence in the European Monetary Union for the period 1960-2008. We identify significant business cycle divergence taking place in the mid-eighties, followed by a persistent convergence period spanning most of the nineties. This convergent episode finishes roughly with the birth of the European Monetary Union. A hypothetical euro area including all the new members of the recent enlargements does not imply a sizeable decrease in the optimality of the currency union. Finally, the European synchronization differential with respect to other developed economies seems to have been diluted within a global cycle since 2004.

Datei:

fileadmin/Documents/Publikationen/Policy_Briefs/06.FIW_PolicyBrief.Fokus Finanzsektor_final.pdf

Abstract: Die mittel- und osteuropäischen Länder (MOEL) stellen wichtige Zielländer für die Direktinvestitions-Aktivitäten österreichischer Unternehmen und Banken dar. Seit 2001 entfielen stets über 50% der gesamten ausländischen Direktinvestitionen (FDI) auf diese Region, was sich erst 2009 durch die globale Wirtschaftskrise änderte. Umgekehrt ist Österreich für viele MOEL einer der wichtigsten FDI-Investoren. Der Finanzsektor spielt bei den FDI Österreichs eine bedeutende Rolle – mehr als die Hälfte der FDI-Bestände entfallen auf den Finanzsektor. Die globale Wirtschaftskrise hat auch die MOEL 2009 stark getroffen, mit Auswirkungen unter anderem auf den Finanzsektor. Für die in den MOEL engagierten österreichischen Banken ist vor allem der prononcierte Anstieg der notleidenden Kredite in mehreren Ländern der Region problematisch. Dies erfordert zusätzlichen Mittelbedarf – auch bei den Muttergesellschaften – für Risikovorsorgen und Kreditabschreibungen. Trotz dieser ungünstigen Entwicklungen scheinen, zumindest einige der österreichischen Banken, ihre Expansionsstrategie in der MOEL-Region fortzusetzen, denn für 2010 wurden bereits neue FDI-Projekte österreichischer Banken angekündigt, was für die wirtschaftliche Entwicklung in der Region durchaus positiv zu werten ist.

Datei:

fileadmin/Documents/Publikationen/Working_Paper/N_053-Tondl_Fornero.pdf

Abstract: Empirical studies analysing productivity effects of inward FDI in Latin America (LA) are inconclusive. We argue that investigating aggregate FDI masks interesting effects of FDI that take place within and across sectors. Moreover, the potential of FDI to generate productivity effects differs across sectors. For these reasons and because sectoral FDI intensities vary significantly among LA countries and change over time, we investigate the productivity effects of FDI in eight different sectors including the primary sector, manufacturing and services. Besides FDI, sector-specific institutional factors, education and a sector‘s export share are considered as control variables. Given the likely endogeneity of variables, a GMM system estimation approach is used. The results indicate that positive productivity effects can be found in all sectors, although they may depend on specific conditions or are limited to a certain time period. Direct productivity effects are highest in the primary sector (agriculture, mining and petroleum production) and in financial services. In contrast, FDI in manufacturing and in transport and telecommunications generates productivity spillovers to nearly all other sectors.