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Revised and New Competitiveness Indicators for Austria Reflect Improvement Trend since EMU Accession

Author

Listed:
  • Walpurga Köhler-Töglhofer
  • Christa Magerl

    (Austrian Institute of Economic Research)

  • Peter Mooslechner

    (Oesterreichische Nationalbank)

Abstract

Maintaining and improving competitiveness is one key goal of economic policy. In the short run, it is primarily price and cost developments as well as exchange rate changes that have the biggest impact on the development of an economy’s competitiveness. The competitiveness of Austrian manufacturing exporters has continued to augment since the country’s entry into Economic and Monetary Union (EMU) – this has been confirmed by the 2006 revision of the price competitiveness indicator for Austria (deflated by the (Harmonised) Index of Consumer Prices – HICP/CPI) and even more so by the new cost competitiveness indicator (deflated by relative unit labor costs) launched in this context. The marked improvement of the cost competitiveness indicator in recent years reflects moderate wage policies coupled with comparatively solid productivity growth in the Austrian manufacturing sector. The lower gain measured by the price competitiveness indicator may be linked to the fact that the HICP/CPI was broadly driven by oil price developments in 2004 and 2005, which masked the favorable unit labor cost developments in the manufacturing industry. Contrary to the development in the manufacturing sector, the price competitiveness in Austria’s travel and tourism sector has deteriorated somewhat: Even though price developments in Austria were more favorable than in the competition markets, they did not wholly offset losses in competitiveness related to exchange rate developments.

Suggested Citation

  • Walpurga Köhler-Töglhofer & Christa Magerl & Peter Mooslechner, 2006. "Revised and New Competitiveness Indicators for Austria Reflect Improvement Trend since EMU Accession," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue Q4/06, pages 70-97.
    • Handle: RePEc:onb:oenbmp:y:2006:i:q4/06:b:5
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    References listed on IDEAS

    as
    1. Marc Klau & San Sau Fung, 2006. "The new BIS effective exchange rate indices," BIS Quarterly Review, Bank for International Settlements, March.
    2. Robert Lafrance & Patrick Osakwe & Pierre St-Amant, 1998. "Evaluating Alternative Measures of the Real Effective Exchange Rate," Staff Working Papers 98-20, Bank of Canada.
    3. Egon Smeral & Alfred Franz & Peter Laimer, 2002. "Ein Tourismussatellitenkonto für Österreich. Ökonomische Zusammenhänge, Methoden und Hauptergebnisse," WIFO Monatsberichte (monthly reports), WIFO, vol. 75(1), pages 29-37, January.
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    Cited by:

    1. Ursula Glauninger & Thomas Url & Klaus Vondra, 2022. "Exchange rate index update for Austria shows lower effective appreciation than previously measured," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue Q4/21, pages 13-41.
    2. Christian Ragacs & Beate Resch & Klaus Vondra, 2011. "Austria’s Manufacturing Competitiveness," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 35-61.

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    JEL classification:

    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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