Working Paper BETA #2019-29

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Title : Inflation, Unemployment and Happiness: empirical evidences of the contribution of Economic Growth

Author(s) : Jalal El ouardighi, Francis Munier

Abstract : This paper improves the understanding of the trade-off between inflation and unemployment and its impact on Subjective Well-Being (SWB), considering the role of the (Growth Domestic Product) GDP Growth and the issue of heterogeneity/nonlinearity. Effects on SWB depends on the spread between observed and potential GDP growth. The results point out country heterogeneity and nonlinearity of the marginal effects of macroeconomic variables on SWB. Economic growth moderates the relationship between unemployment as well as inflation and SWB. Both unemployment and GDP per capita growth rates have an important impact on Europeans’ SWB. Fostering economic growth must be one of the priorities of European policy.

Key-words : Subjective well-being, Economic growth, unemployment, inflation, heterogeneity / nonlinearity.

JEL Classification : C33, O10, I31.