A new take on the misery index
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The original misery index compiled by economist Arthur Okun added together a country’s unemployment and inflation rates to derive a simple measure of ‘economic misery’. The idea was popular at times of stagflation - a combination of stagnant growth, rising unemployment and accelerating consumer prices. Various reincarnations of the Misery Index have been developed over the years - Harvard’s Robert Barro, for instance, made one that includes interest rates and GDP
Now we have new one created by Pierre Cailleteau, an economist and sovereign risk analyst at Moody’s. The index adds together a country’s budget deficit, as a percentage of gross domestic product, and its unemployment rate. It captures the current conundrum for many countries: their economies need stimulus, but their budgets may not be able to afford it. It reflects the realisation of a new age of fiscal austerity as governments across the world battle to control their ballooning fiscal deficits and accumulating national debt. Floyd Norris writes about this new version of the index in this piece in the New York Times.
Spain is at the top of the Misery Index, Latvia places second and Lithuania third, followed by Ireland, Greece and the UK. The US places eighth after Iceland. This makes the Uk the lousiest economy among the Group of 7! Of the 16 economies studied by Moody’s, the Czech Republic, Italy and Germany were forecast to be the least miserable.
Happy Christmas!
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Unit 2 Macro: Cyclical and Structural Economic Issues Facing the UK [23 May 2012]
Unit 2 Macro: Evaluation on Supply-Side Policies [21 May 2012]
Unit 3 Micro: Game Theory and Business Economics [21 May 2012]
Unit 2 Macro: Migration and the UK Economy [20 May 2012]
Unit 2 Macro: Positive and Negative Multiplier Effects [20 May 2012]
Unit 2 Macro: The Importance of Productivity [20 May 2012]
Unit 2 Macro: Measuring Unemployment in the UK [20 May 2012]
Unit 2 Macro: Measuring Inflation in the UK [20 May 2012]
Unit 2 Macro: Real Interest Rates [20 May 2012]
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Unit 2 Macro: The Output Gap [20 May 2012]
Revision notes on unemployment [20 May 2012]
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Unit 2 Macro: Monetary Policy and Inflation Glossary [5 May 2012]
Unit 2 Macro: Unemployment Glossary [5 May 2012]
Unit 2 Macro: Fiscal Policy Glossary [5 May 2012]
Unit 2 Macro: Economic Cycle Glossary [5 May 2012]
Unit 2 Macro: Aggregate Demand Glossary [5 May 2012]
Macro Revision - Key Statistics on the UK Economy [4 May 2012]
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Macro Revision: Putting Things in Context [29 Apr 2012]
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Unit 2 Macro: Revision on Real Economic Data [2 Apr 2012]
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Unit 2 Macro: Revision on Real Disposable Income [2 Apr 2012]
Unit 3 Micro: Revision on Scale Economies, Technology and Prices [1 Apr 2012]
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Unit 2 Macro: Focus on China - Trade and Growth [27 Jan 2012]
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