Dynamic Welfare Cost of Stagnation: An Alternative Measure to the Lucas–Obstfeld Model

24 Pages Posted: 4 May 2011

See all articles by Tatsuyoshi Miyakoshi

Tatsuyoshi Miyakoshi

Osaka University

Masakatsu Okubo

University of Tsukuba

Junji Shimada

Aoyama Gakuin University - School of Business

Date Written: May 2011

Abstract

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.

Suggested Citation

Miyakoshi, Tatsuyoshi and Okubo, Masakatsu and Shimada, Junji, Dynamic Welfare Cost of Stagnation: An Alternative Measure to the Lucas–Obstfeld Model (May 2011). Pacific Economic Review, Vol. 16, Issue 2, pp. 168-191, 2011, Available at SSRN: https://ssrn.com/abstract=1830941 or http://dx.doi.org/10.1111/j.1468-0106.2011.00541.x

Tatsuyoshi Miyakoshi (Contact Author)

Osaka University ( email )

1-1 Yamadaoka
Suita
Osaka, 565-0871
Japan

Masakatsu Okubo

University of Tsukuba ( email )

Junji Shimada

Aoyama Gakuin University - School of Business

4-4-25 Shibuya, Shibuya-ku
Tokyo, 150-8366
Japan

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