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

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  • Heinz Welsch

Abstract

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.

Suggested Citation

  • Heinz Welsch, 2011. "The magic triangle of macroeconomics: how do European countries score?," Oxford Economic Papers, Oxford University Press, vol. 63(1), pages 71-93, January.
    • Handle: RePEc:oup:oxecpp:v:63:y:2011:i:1:p:71-93
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    File URL: http://hdl.handle.net/10.1093/oep/gpq020
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. European Unhappiness and the Crisis
      by Dirk in econoblog101 on 2011-02-15 01:40:14

    Citations

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    Cited by:

    1. Alberto Montagnoli & Mirko Moro, 2018. "The Cost of Banking Crises: New Evidence from Life Satisfaction Data," Kyklos, Wiley Blackwell, vol. 71(2), pages 279-309, May.
    2. Heinz Welsch & Jan Kühling, 2016. "How Has The Crisis Of 2008–09 Affected Subjective Well-Being? Evidence From 25 Oecd Countries," Bulletin of Economic Research, Wiley Blackwell, vol. 68(1), pages 34-54, January.
    3. Heinz Welsch & Jan Kühling, 2011. "How Has the Crisis of 2008-2009 Affected Subjective Well-Being?," Working Papers V-330-11, University of Oldenburg, Department of Economics, revised Jan 2011.
    4. repec:old:wpaper:342 is not listed on IDEAS
    5. Heinz Welsch & Jan Kühling, 2011. "Anti-Inflation Policy Benefits the Poor: Evidence from Subjective Well-Being Data," Working Papers V-343-11, University of Oldenburg, Department of Economics, revised Dec 2011.
    6. repec:zbw:hohpro:330 is not listed on IDEAS
    7. Ochsen, Carsten & Welsch, Heinz, 2012. "Who benefits from labor market institutions? Evidence from surveys of life satisfaction," Journal of Economic Psychology, Elsevier, vol. 33(1), pages 112-124.
    8. David G. Blanchflower & David N.F. Bell & Alberto Montagnoli & Mirko Moro, 2014. "The Happiness Trade‐Off between Unemployment and Inflation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 46(S2), pages 117-141, October.
    9. 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.
    10. repec:zbw:hohpro:343 is not listed on IDEAS
    11. repec:zbw:hohpro:342 is not listed on IDEAS
    12. 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.
    13. Heinz Welsch & Jan K¨¹hling, 2015. "Macroeconomic Preferences by Income and Education Level: Evidence from Subjective Well-Being Data," Review of Economics & Finance, Better Advances Press, Canada, vol. 5, pages 15-32, August.
    14. repec:old:wpaper:343 is not listed on IDEAS
    15. repec:old:wpaper:330 is not listed on IDEAS
    16. Heinz Welsch & Jan Kühling, 2011. "Comparative Economic Performance and Institutional Change in OECD Countries: Evidence from Subjective Well-Being Data," Working Papers V-342-11, University of Oldenburg, Department of Economics, revised Dec 2011.
    17. Ha Trong Nguyen & Luke Brian Connelly, 2018. "Out of sight but not out of mind: Home countries' macroeconomic volatilities and immigrants' mental health," Health Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 189-208, January.

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