Subjective Economic Well-being in Transition Countries: Investigating the Relative Importance of Macroeconomic Variables

In this paper we combine the data from surveys about life-satisfaction and macroeconomic data and analyse the (order of) importance of macroeconomic variables for one’s subjective economic well-being. This approach allows an analysis from a subjective view – that of the public, in contrast to the usually used objective view, whereby policy goals are assumed to reflect public opinion. We find that the key macroeconomic variables of inflation, unemployment and GDP (growth) matter for the public’s sense of economic well-being in transition countries. Moreover, improvements in national income lead to both temporary and permanent gains in subjective economic well-being in transition countries. Habituation effects are present, indicating that individuals become accustomed to an increase in national income, but not all the benefits of this increase dissipate over time. Furthermore, GDP growth and unemployment are found to be more important than inflation in transition countries. This suggests that achieving GDP growth is an important goal of economic policy not only from the point of view of policy-makers but also from that of the public, and that it should be pursued. On the other hand, given that unemployment is more important than inflation for the public’s economic well-being, policy-makers in transition countries might need to revise their exclusive focus on inflation. This is to say that more effort should be put into decreasing unemployment (which might have an adverse effect on inflation) rather than into restraining inflation.subjective economic well-being, surveys, transition countries, Croatia, macroeconomic variables

Cointegration Approach to Analysing Inflation in Croatia

The aim of this paper is to analyse the determinants of inflation in Croatia in the period 1994:6-2006:6. We use a cointegration approach and find that increases in wages positively influence inflation in the long-run. Furthermore, in the period from June 1994 onward, the depreciation of the currency also contributed to inflation. Money does not explain Croatian inflation. This irrelevance of the money supply is consistent with its endogeneity to exchange rate targeting, whereby the money supply is determined by developments in the foreign exchange market. The value of inflation in the previous period is also found to be significant, thus indicating some inflation inertia.inflation, Croatia, cointegration

Life Satisfaction in Croatia

In this paper we identify the factors that have influenced average life satisfaction for Croatians based on data collected in reports from 1999 and 2006. Our analysis of the data from the European Values Survey (EVS) reveals that in 1999 life satisfaction was higher for people who were married, those who were employed, and those who had an income between 5,001 and 8,000 Croatian kuna (HRK) per month. Life satisfaction was U-shaped in age, minimizing around the age of 50. There appeared to be little correlation between life satisfaction and education level. Based on our analysis of the 2006 data from the United Nations Development Program (UNDP), we find that in 2006 life satisfaction was higher for people who were married, those who were employed, those who were out of the labor force, those with a university degree, and those with higher incomes. The impact of age in 2006 was U-shaped as it was in the 1999 data, minimizing around the age of 58. The data from both years strongly supports the view that life satisfaction rises with GDP per capita in the county in which a respondent resides.life satisfaction, counties, GDP per capita, Croatia

Investigating Macroeconomic Determinants of Happiness in Transition Countries

This paper combines the data from surveys about happiness and macroeconomic data and analyzes the effects of macroeconomic variables on self-reported happiness in transition countries, focusing particularly on the impact of government size in the economy. We use the international data on the reported happiness levels of thousands of individuals and find that government expenditure as a percentage of gross domestic product positively and significantly influences happiness in a set of thirteen transition countries.