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dc.contributor.authorCohen, I.K.*
dc.contributor.authorFerretti, F.*
dc.contributor.authorMcIntosh, Bryan*
dc.date.accessioned2016-10-13T08:55:07Z
dc.date.available2016-10-13T08:55:07Z
dc.date.issued2014-12-13
dc.identifier.citationCohen IK, Ferretti F and McIntosh B (2016) Decomposing the misery index: A dynamic approach. Cogent Economics and Finance. 2.en_US
dc.identifier.urihttp://hdl.handle.net/10454/9907
dc.descriptionYesen_US
dc.description.abstractThe misery index (the unweighted sum of unemployment and inflation rates) was probably the first attempt to develop a single statistic to measure the level of a population’s economic malaise. In this letter, we develop a dynamic approach to decompose the misery index using two basic relations of modern macroeconomics: the expectations-augmented Phillips curve and Okun’s law. Our reformulation of the misery index is closer in spirit to Okun’s idea. However, we are able to offer an improved version of the index, mainly based on output and unemployment. Specifically, this new Okun’s index measures the level of economic discomfort as a function of three key factors: (1) the misery index in the previous period; (2) the output gap in growth rate terms; and (3) cyclical unemployment. This dynamic approach differs substantially from the standard one utilised to develop the misery index, and allow us to obtain an index with five main interesting features: (1) it focuses on output, unemployment and inflation; (2) it considers only objective variables; (3) it allows a distinction between short-run and long-run phenomena; (4) it places more importance on output and unemployment rather than inflation; and (5) it weights recessions more than expansions.en_US
dc.language.isoenen_US
dc.relation.isreferencedbyhttp://dx.doi.org/10.1080/23322039.2014.991089en_US
dc.rights© 2014 The Author(s). This open access article is distributed under a Creative Commons Attribution (CC-BY) 3.0 license.en_US
dc.subjectBusiness cycle; Economic discomfort; Misery index; Okun's law; Phillips curveen_US
dc.titleDecomposing the misery index: A dynamic approachen_US
dc.status.refereedYesen_US
dc.date.Accepted2014-11-19
dc.typeArticleen_US
dc.type.versionpublished version paperen_US
refterms.dateFOA2018-07-27T01:53:44Z


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