The Costs of Recession
The paper measures the cost of business cycles by asking what proportion of consumption representative households, whose head is currently employed, would be prepared to give up to avoid the risk of unemployment. Previous estimates by Lucas suggested that the costs of macroeconomic fluctuations measured in this way are surprisingly small. The first part of the paper presents a critique of the Lucas aggregate method showing that his estimates are not robust. An alternative disaggregated framework is then developed and shows that the costs of macroeconomic fluctuations are significantly higher than those obtained by Lucas. Consequently, the view that inflation 'matters' whereas business cycles are unimportant events is questioned. Copyright 1994 by Royal Economic Society.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 104 (1994)
Issue (Month): 422 (January)
|Contact details of provider:|| Postal: |
Phone: +44 1334 462479
Web page: http://www.res.org.uk/Email:
More information through EDIRC
|Order Information:||Web: http://www.blackwellpublishers.co.uk/asp/journal.asp?ref=0013-0133|
When requesting a correction, please mention this item's handle: RePEc:ecj:econjl:v:104:y:1994:i:422:p:20-36. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.