# Welfare cost of business cycles

**URL:** <https://forum.dynare.org/t/welfare-cost-of-business-cycles/3802>\
**Category:** Optimal Policy\
**Created:** [1 April 2014 09:39 UTC](https://forum.dynare.org/t/welfare-cost-of-business-cycles/3802 "2014-04-01T09:39:55Z")\
**Posts on this page:** 1\
**Showing post:** 1

<div class="post-metadata">

**Author:** ![Philipp](https://forum.dynare.org/letter_avatar_proxy/v4/letter/p/46a35a/32.png) [@Philipp](https://forum.dynare.org/u/Philipp)\
**Post date:** [1 April 2014 09:39 UTC](https://forum.dynare.org/t/welfare-cost-of-business-cycles/3802/1 "2014-04-01T09:39:55Z")

</div>

Dear Dynare users,

I would like to calculate the Welfare cost of business cycles associated to a particular monetary regime, as it is done in “Stabilization Policy and the costs of dollarization” by Schmitt-Grohé and Uribe (2000), section 6, pages 17-18.  
How do I have to implement

U((1-\xi)c,h)=E

in order to find \xi?  
Suppose further that U(c,h)=\frac{c^{1-\sigma}}{1-\sigma}-\varphi\frac{n^{1+\nu}}{1+\nu}, I know that I have to take a second order approximation around the non-stochastic steady state. What I do not understand is how this can be implemented in Dynare. Where do I extract which information? Can this be done in an m. file outside of Dynare?

I’d appreciate a simple example code.

Best,  
Philipp

---

_[View the full topic](https://forum.dynare.org/t/welfare-cost-of-business-cycles/3802)._