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Marcelo A Mello and Christiano A Coelho
''Consumption, Leisure, and Cross-country Welfare Costs of Business Cycles''
( 2020, Vol. 40 No.1 )
We compute the welfare costs of business cycles for a broad panel of countries with aggregate data over the period 1950-2014. We find substantial cross-country variability in the estimated welfare costs of business cycles. Welfare costs appear to be larger in Latin American and Asian economies. Additionally, for some individual countries, the estimated welfare costs of business cycles are an order of magnitude larger than for the U.S. economy. Our estimates are robust to different country groupings, e.g., Advanced Economies vs. Emerging Markets, or Inflation Targeters vs. non-Targeters, different time periods, and the inclusion of the labor-leisure tradeoff in the utility function.
Keywords: Welfare Costs of Business Cycles, Consumption, Leisure-Hours, Business Cycles
JEL: E3 - Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data)
E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General
Manuscript Received : Oct 15 2018 Manuscript Accepted : Jan 06 2020

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