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DYNAMIC WELFARE COST OF STAGNATION: AN ALTERNATIVE MEASURE TO THE LUCAS–OBSTFELD MODEL
Author(s) -
MIYAKOSHI TATSUYOSHI,
OKUBO MASAKATSU,
SHIMADA JUNJI
Publication year - 2011
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/j.1468-0106.2011.00541.x
Subject(s) - economics , welfare , measure (data warehouse) , mathematical economics , computer science , market economy , database
The present paper proposes an alternative measure to the Lucas–Obstfeld model to analyze the welfare costs of stagnation, and provides a practical illustration of both the Lucas–Obstfeld model and the alternative model. Compared with the Lucas–Obstfeld model, the alternative model can evaluate: (i) whether policy was implemented in a timely fashion; (ii) whether the policy cost was expensive compared with the cost of stagnation; and (iii) whether the policy implemented was effective or whether an additional policy is required.