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

Osmani Guillén, João Issler and Afonso Arinos de Mello Franco-Neto
Authors registered in the RePEc Author Service: Afonso Arinos Mello Franco Neto

Journal of Economic Dynamics and Control, 2014, vol. 39, issue C, 62-78

Abstract: The main objective of this paper is to propose a novel setup that allows estimating separately the welfare costs of the uncertainty stemming from business-cycle fluctuations and from economic-growth variation, when the two types of shocks associated with them (respectively, transitory and permanent shocks) hit consumption simultaneously. Separating these welfare costs requires dealing with degenerate bivariate distributions. Levi's Continuity Theorem and the Disintegration Theorem allow us to adequately define the one-dimensional limiting marginal distributions. Under Normality, we show that the parameters of the original marginal distributions are not affected, providing the means for calculating separately the welfare costs of business-cycle fluctuations and of economic-growth variation.

Keywords: Business cycles fluctuations; Economic-growth variation; Welfare costs; Beveridge–Nelson decomposition; Unobserved-component model (search for similar items in EconPapers)
JEL-codes: C32 C53 E32 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165188913002236
Full text for ScienceDirect subscribers only

Related works:
Working Paper: On the welfare costs of business-cycle fluctuations and economic-growth variation in the 20th century and beyond (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:39:y:2014:i:c:p:62-78

DOI: 10.1016/j.jedc.2013.11.008

Access Statistics for this article

Journal of Economic Dynamics and Control is currently edited by J. Bullard, C. Chiarella, H. Dawid, C. H. Hommes, P. Klein and C. Otrok

More articles in Journal of Economic Dynamics and Control from Elsevier
Bibliographic data for series maintained by Catherine Liu ().