Archive for February 4th, 2008

How about happiness as a monetary policy tool?

February 4, 2008

I just came across this refreshing paperon monetary policy titled Should Central Banks Maximize Happiness? The paper is by Rafael Di Tella (Harvard Business School) and Robert MacCulloch (Imperial College, London) and is a wonderful read. The paper was presented in the Boston Fed conference

The Congressional mandate of the Federal Reserve is to pursue both price stability and full employment. But how should trade-offs between volatility in inflation and unemployment be viewed in the light of recent research on the determinants of individuals’ life satisfaction?

The authors use two surveys that measure happiness to evaluate whether the same can be used for monetary policy. They find some positive evidence as well.

A nice perspective. So far the papers I have read on BF/BE have been related to microeconomics- individual behavior, market imperfections etc. This is the first I have seen having a macro application. There is a long way to go but atleast a beginning has been made.  

Assorted Links

February 4, 2008

1. India’s growth for 2006-07 has been revised upwards from 9.4% to 9.6%. TTR comments on the same.

2. Despite rising recession concerns, the data continues to send conflicting signals. WSJ Blog points

3. Greg Mankiw on rising inflation expectations.

4. Fin Prof on why US firms hold more cash

5. PSD Blog points to a new book that looks at differences behind men and women’s decision to migrate and remit.

6. Ajay Shah has an excellent commentary on Microsoft’s bid for Yahoo.

7. Ajay Shah suggests some books on Indian economy

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