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The magic triangle of macroeconomics: how do European countries score?


Author Info

  • Heinz Welsch


This paper studies the macroeconomic performance of the EU-12 member countries over 1990--2002 from the point of view of the subjective well-being (life satisfaction) of the citizens. The paper uses data for over 50,000 individuals and controls for personal characteristics (especially income and employment status). Life satisfaction is found to be negatively associated with the unemployment rate and inflation, but positively associated with the growth rate. In contrast to earlier findings, the weights placed on inflation and unemployment are of a similar magnitude. The life satisfaction regression is used to determine the weights to be attached to growth, employment, and price stability in a macroeconomic performance index. It is found that the overall macroeconomic performance ranking of the countries is robust across alternative specifications of the index. Copyright 2011 Oxford University Press 2010 All rights reserved, Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 63 (2011)
Issue (Month): 1 (January)
Pages: 71-93

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Handle: RePEc:oup:oxecpp:v:63:y:2011:i:1:p:71-93

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Blog mentions

As found by, the blog aggregator for Economics research:
  1. European Unhappiness and the Crisis
    by Dirk in econoblog101 on 2011-02-14 19:40:14
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Heinz Welsch & Jan Kühling, 2011. "Anti-Inflation Policy Benefits the Poor: Evidence from Subjective Well-Being Data," Working Papers, University of Oldenburg, Department of Economics V-343-11, University of Oldenburg, Department of Economics, revised Dec 2011.
  2. Ochsen, Carsten & Welsch, Heinz, 2012. "Who benefits from labor market institutions? Evidence from surveys of life satisfaction," Journal of Economic Psychology, Elsevier, Elsevier, vol. 33(1), pages 112-124.
  3. repec:old:wpaper:342 is not listed on IDEAS
  4. repec:old:wpaper:330 is not listed on IDEAS
  5. Heinz Welsch & Jan Kühling, 2011. "How Has the Crisis of 2008-2009 Affected Subjective Well-Being?," Working Papers, University of Oldenburg, Department of Economics V-330-11, University of Oldenburg, Department of Economics, revised Jan 2011.
  6. repec:old:wpaper:343 is not listed on IDEAS
  7. Heinz Welsch & Jan Kühling, 2011. "Comparative Economic Performance and Institutional Change in OECD Countries: Evidence from Subjective Well-Being Data," Working Papers, University of Oldenburg, Department of Economics V-342-11, University of Oldenburg, Department of Economics, revised Dec 2011.


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