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Uncertainty about welfare effects of consumption fluctuations

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  • Houssa, Romain

Abstract

This paper proposes Bayesian estimates for welfare effects of consumption fluctuations and growth. Annual data from 82 developed and developing countries indicate a large degree of uncertainty as regards point estimates. Moreover, the comparison between the welfare gain from consumption stabilization and the welfare gain from growth yields inconclusive results for many developed and developing countries. These findings suggest the need for caution in drawing policy conclusions from point estimates.

Suggested Citation

  • Houssa, Romain, 2013. "Uncertainty about welfare effects of consumption fluctuations," European Economic Review, Elsevier, vol. 59(C), pages 35-62.
  • Handle: RePEc:eee:eecrev:v:59:y:2013:i:c:p:35-62
    DOI: 10.1016/j.euroecorev.2012.12.006
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    3. Francis W. Ahking, 2019. "The Welfare Cost of Business Cycles at the States’ Levels," Working papers 2019-03, University of Connecticut, Department of Economics.

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    More about this item

    Keywords

    Business cycles; Growth; Welfare; Bayesian inference;
    All these keywords.

    JEL classification:

    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General

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