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The "Magic Square" of Economic Policy measured by a Macroeconomic Performance Index

Oliver Picek

No 1702, Working Papers from New School for Social Research, Department of Economics

Abstract: The "Magic Square of Economic Policy" highlights four main goals of economic policy: growth, full employment, price stability, and balanced trade. A Macroeconomic Performance Index can be used to assign relative weights to the dierent goals within the Magic Square, giving a single index number per year per country. The legitimacy of the simplest weighting scheme that assigns equal weight to all four goals is discussed. The macroeconomic performance of eleven euro zone area countries is evaluated over time and across countries.

Keywords: Macroeconomic Policy; Economic Performance; Misery Index; Magic Polygon; Magisches Vieleck; Magisches Viereck; Magic Rectangle; Macroeconomic Imbalances (search for similar items in EconPapers)
JEL-codes: E60 E61 P52 I31 C82 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2017-01
New Economics Papers: this item is included in nep-eec and nep-mac
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