Thursday, November 19, 2009

Meet The Misery Index

It's already tough when you're facing high inflation. Now just imagine that you're without a job as well. It becomes hellish and it's the reason why Arthur Okun suggested back in the 70's that we add the two together to come up with his Misery Index. And why inflation targets have become so popular since 1989.

Computing it for Mauritius yields interesting insights. It hit a 10-year high of 20.5% at the end of 2007 and stayed almost put at 20% a year later. That's close to double the level when Ramgoolam lost power in 2000. Federation 2 had also a much lower average than the supply-side folly of Sithanen: 13.3% vs 19.4%. That is Sithanen's new model produced 46% more misery.

1 comment:

akagugo said...

For those who don't buy into Mo's (Ibrahim) index, this one will comfort you: we're in the Top 50 of the Misery Index.
And you may be well advised to have a look at the various causes of misery - the list-topper Venezuela is afflicted with 56.2% inflation (officially), while it's actually estimated 5 times higher!
Unemployment and interest rates are also habitual culprits crippling the other list-toppers: an indication to our leaders on where to concentrate their efforts if they wish to go down this list.