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Monetary policy and happiness: Preferences over inflation and unemployment in Latin America

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  • Ruprah, Inder J.
  • Luengas, Pavel

Abstract

Using subjective well-being survey data for Latin America, we present evidence that both inflation and unemployment reduce well-being; where the cost of inflation in terms of unemployment, hence the relative size of the weights in a social well-being functions, is about one to eight, almost double of that found for OECD countries. The trade-off, and therefore the misery index, differs across subgroups. For example, the young and left-leaning citizens are more concerned with unemployment than inflation.

Suggested Citation

  • Ruprah, Inder J. & Luengas, Pavel, 2011. "Monetary policy and happiness: Preferences over inflation and unemployment in Latin America," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(1), pages 59-66, February.
  • Handle: RePEc:eee:soceco:v:40:y:2011:i:1:p:59-66
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    References listed on IDEAS

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    1. Andrew E. Clark, 2003. "Unemployment as a Social Norm: Psychological Evidence from Panel Data," Journal of Labor Economics, University of Chicago Press, vol. 21(2), pages 289-322, April.
    2. Robert J. MacCulloch & Rafael Di Tella & Andrew J. Oswald, 2001. "Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness," American Economic Review, American Economic Association, vol. 91(1), pages 335-341, March.
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    5. Moura, Marcelo L. & de Carvalho, Alexandre, 2010. "What can Taylor rules say about monetary policy in Latin America?," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 392-404, March.
    6. David G. Blanchflower, 2007. "Is Unemployment More Costly Than Inflation?," NBER Working Papers 13505, National Bureau of Economic Research, Inc.
    7. Rafael Di Tella & Robert MacCulloch, 2006. "Some Uses of Happiness Data in Economics," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 25-46, Winter.
    8. Woodford Michael, 2002. "Inflation Stabilization and Welfare," The B.E. Journal of Macroeconomics, De Gruyter, vol. 2(1), pages 1-53, February.
    9. Bruno S. Frey, 2008. "Happiness: A Revolution in Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262062771, January.
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    Cited by:

    1. repec:eee:soceco:v:73:y:2018:i:c:p:53-65 is not listed on IDEAS
    2. Ha Trong Nguyen & Alan Duncan, 2015. "Macroeconomic Fluctuations in Home Countries and Immigrants’ Wellbeing: New Evidence from Down Under," Bankwest Curtin Economics Centre Working Paper series WP1502, Bankwest Curtin Economics Centre (BCEC), Curtin Business School.
    3. Malte Hübner & Marcus Klemm, 2015. "Preferences over inflation and unemployment in Europe: a north–south divide?," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 62(4), pages 319-335, December.
    4. Thomas Wai-Kee Yuen & Winnie Wan-Ling Chu, 2015. "Happiness in ASEAN member states," International Journal of Happiness and Development, Inderscience Enterprises Ltd, vol. 2(1), pages 69-83.
    5. Elissa Braunstein, 2013. "Central bank policy and gender," Chapters,in: Handbook of Research on Gender and Economic Life, chapter 21, pages 345-358 Edward Elgar Publishing.
    6. repec:spr:jhappi:v:18:y:2017:i:6:d:10.1007_s10902-016-9797-y is not listed on IDEAS
    7. Nguyen Trung & Kimoon Cheong & Pham Nghi & Won Kim, 2013. "Relationship Between Socio-Economic Values and Wellbeing: An Overview Research in Asia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 111(2), pages 453-472, April.
    8. Hassan Gholipour Fereidouni & Youhanna Najdi & Reza Ekhtiari Amiri, 2013. "Do governance factors matter for happiness in the MENA region?," International Journal of Social Economics, Emerald Group Publishing, vol. 40(12), pages 1028 - 1040, November.

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