On the welfare costs of business-cycle fluctuations and economic-growth variation in the 20th century and beyond

Guillén, Osmani Teixeira de Carvalho; Issler, João Victor; Franco-Neto, Afonso Arinos de Mello

doi:10.1016/j.jedc.2013.11.008

Cited by 12 publications

(7 citation statements)

References 45 publications

(56 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In addition, because of the debt crises in Europe after 2002 and its impacts on the economy and politics, business activities have dropped by more than 5%. Guillen, Issler, and MelloFransco-Neto (2013) found that the welfare cost of economic-growth variation is relatively large and the welfare cost of business cycles is much smaller than previously thought. This means that the representative consumer actually pays to be indifferent between actual consumption and cycle-free consumption.…”

Section: Introductionmentioning

confidence: 64%

Interactions between business conditions, economic growth and crude oil prices

Sodeyfi

Katırcıoğlu

2016

Economic Research-Ekonomska Istraživanja

View full text Add to dashboard Cite

This study aims to research the empirical relationship between business conditions (BCs) and crude oil prices by employing a time series analysis for a panel of regions. BCs have been proxied by real income and real industrial production (IND) as advised in the relevant literature. Results suggest that economic activity and industrial value added are in a long-term relationship with oil price movements in the selected countries and regions. Gross domestic product (GDP) and IND are significantly affected by oil prices worldwide. Real income converges to long-term paths significantly, but at low levels through the channel of oil price movements. Oil price has a negative impact on business activities in some countries while it has a positive impact in others. Therefore, the sign of coefficient of oil prices on business conditions has found significant in this research study.

show abstract

Section: Introductionmentioning

confidence: 64%

Interactions between business conditions, economic growth and crude oil prices

Sodeyfi

Katırcıoğlu

2016

Economic Research-Ekonomska Istraživanja

View full text Add to dashboard Cite

show abstract

“…For example, Obstfeld (1994) switches the original transitory shocks for permanent ones, Reis (2009) further develops the time-series aspects, while Issler et al (2008) and Guillén et al (2014) combine both types of shocks. More recently, Barros et al (2017) use a statespace decomposition and Hai et al (2020) include memorable goods.…”

Section: Related Literaturementioning

confidence: 99%

The Welfare Costs of Business Cycles Unveiled: Measuring the Extent of Stabilization Policies

Barros

Gomes

Luduvice

2021

Working Paper (Federal Reserve Bank of Cleveland)

View full text Add to dashboard Cite

How can we measure the welfare benefit of ongoing stabilization? We develop a methodology to calculate the welfare cost of business cycles taking into account that observed consumption is partially smoothed. We propose a decomposition that disentangles consumption in a mix of laissez-faire (absent policies) and riskless components. With a novel identification strategy, we estimate the span of stabilization power. Our results show that the welfare cost of total fluctuations is 5.81 percent of lifetime consumption, in which 80 percent is smoothed by the status quo, yielding a residual 1.05 percent to be tackled by policy.

show abstract

“…We dialogue directly with the classic literature and use the flexibility of this approach to apply our formulation to three types of shock structures for the consumption process: the one of Lucas (1987) with transitory shocks, the one of Obstfeld (1994) with permanent innovations, and a third one that departs from the i.i.d. structure and uses an ARIMA process for the consumption series as proposed by Reis (2009), which we are able to incorporate into our framework with the use of the Beveridge-Nelson decomposition (Beveridge and Nelson, 1981;Issler et al, 2008;Guillén et al, 2014).…”

Section: Introductionmentioning

confidence: 99%

The welfare costs of business cycles unveiled: measuring the extent of stabilization policies

Barros¹,

Gomes²,

Luduvice

2023

Working Paper (Federal Reserve Bank of Cleveland)

View full text Add to dashboard Cite

How can we measure the welfare benefit of ongoing stabilization policies? We develop a methodology to calculate the welfare cost of business cycles taking into account that observed consumption is partially smoothed. We propose a decomposition that disentangles consumption in a mix of laissez-faire (absent policies) and riskless components. With a novel identification strategy, we estimate the span of stabilization power. In our preferred specification, we find that the welfare cost of total fluctuations is 11 percent of lifetime consumption, of which 82 percent is smoothed by the status quo policies, yielding a residual 1.8 percent of consumption to be tackled by policymakers.

show abstract

On the welfare costs of business-cycle fluctuations and economic-growth variation in the 20th century and beyond

Cited by 12 publications

References 45 publications

Interactions between business conditions, economic growth and crude oil prices

Interactions between business conditions, economic growth and crude oil prices

The Welfare Costs of Business Cycles Unveiled: Measuring the Extent of Stabilization Policies

The welfare costs of business cycles unveiled: measuring the extent of stabilization policies

Contact Info

Product

Resources

About