European Business Schools Librarian's Group

Working Papers,
Vienna University of Economics and Business Research Group: Growth and Employment in Europe: Sustainability and Competitiveness

The Austrian Miracle - Revisited: Testing eight Explanations for High Growth and maybe a ninth

Martin Zagler ()
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Martin Zagler: Department of Economics, Vienna University of Economics & B.A.

Abstract: This paper is a first attempt to empirically evaluate some competing hypotheses for the Austrian growth performance. We find that the real appreciations, gross investment, a low duration of unemployment and high youth employment exhibit a significant influence on economic growth. This validates the hard currency policy hypothesis, the macroeconomic management hypothesis, and the microinstitutions hypothesis, whilst all other fail according to this exercise. In particular, we find the Schulmeister-thesis of loose money and the deficit spending hypothesis are even counterfactual. Summarizing, we find that economic policy had its share in promoting growth in the Austrian economy. As a byproduct from our analysis, we find that low levels of unemployment have a significant and positive impact on the growth rate of real GDP, which calls for further theoretical research in this direction.

Keywords: Economic Growth; Growth Determinants; Extreme Bounds Test; CDF-Test; Austria

JEL-codes: O47; O53 April 2000

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