The Dynamic Welfare Cost of Stagnation: An Alternative Measure to the Lucas-Obstfeld Model

Tatsuyoshi Miyakoshi (), Masakatsu Okubo and Junji Shimada
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Tatsuyoshi Miyakoshi: Osaka School of International Public Policy (OSIPP), Osaka University
Masakatsu Okubo: Graduate School of Systems and Information Engineering,University of Tsukuba
Junji Shimada: School of Management, Aoyama Gakuin University

No 07-26, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: This paper proposes an alternative measure to the Lucas-Obstfeld model to analyze the welfare costs of stagnation, and provides a practical illustration of both the Lucas-Obstfeld model and the alternative model. Compared with the Lucas-Obstfeld model, the alternative model can evaluate: (i) whether the policy was implemented in a timely fashion, (ii) whether the policy cost was expensive compared with the cost of stagnation, and (iii) whether the policy implemented was effective or whether an additional policy is required.

Keywords: Lucas model; dynamic welfare cost; time-varying parameters (search for similar items in EconPapers)
JEL-codes: C32 C50 E20 E32 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2007-06
New Economics Papers: this item is included in nep-cba and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:osk:wpaper:0726

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