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NBER Working Papers and Publications
|August 2019||Fooled by the Cycle: Permanent versus Cyclical Improvements in Social Indicators|
with José Andrée Camarena, Luciana Galeano, Jorge Puig, Daniel Riera-Crichton, Carlos Vegh, Lucila Venturi, Guillermo Vuletin: w26199
This paper studies the time-series behavior of a set of widely-used social indicators and uncovers two important stylized facts. First, not all social indicators are created equal in terms of the importance of cyclical fluctuations. While some social indicators such as the unemployment rate and monetary poverty show large cyclical fluctuations, other social measures such as the Human Development Index are, by construction, dominated by long-run trends. Second, a large fraction of the cyclical fluctuations in social indicators can be explained by the cyclical changes in income (proxied by real GDP per capita). Since cyclical income volatility is much larger in the developing world, these two critical facts raise fundamental issues regarding how permanent are improvements in social indic...