Responses of Austrian Firms to a Decline in Demand – Results of a Company Survey

Claudia Kwapil ()
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Claudia Kwapil: Oesterreichische Nationalbank, Economic Analysis Division, http://www.oenb.at

Monetary Policy & the Economy, 2009, issue 2, 68–82

Abstract: Based on a survey of around 560 Austrian firms conducted within Wage Dynamics Network (WDN) of the ESCB this study investigates how these firms respond to a decline in demand. About 80% of the firms surveyed report that they consider cutting costs a relevant or highly relevant measure in response to a demand shock. The interpretation of the responses suggests that such cost cuts mitigate, at least in part, the drop in output and thus tend to dampen the shock. Furthermore, 55% of firms stated that they would primarily cut nonlabor costs, while 45% would rather cut labor costs; also, firms would rather dismiss employees than cut their base wages. This attitude of Austrian firms can be mainly traced to their fear of declines in labor productivity.

Keywords: survey data; demand shock; wage rigidities (search for similar items in EconPapers)
JEL-codes: C25 E31 J30 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (1)

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