Sacrifice Ratio

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Sacrifice Ratio

The cost to an economy when growth slows or stops in order to combat inflation. The ratio shows the cost for each percentage of decrease in inflation. It is calculated thusly:

Sacrifice ratio = (Dollar cost of lost production) / (Percentage of change to the inflation rate)
References in periodicals archive ?
In the sixth we compare the two models while in the seventh we compute the sacrifice ratios under imperfect credibility.
Section V tests the robustness of the results under the assumptions that loans are denominated in foreign currency, Section VI reports results for a shocks to the uncovered interest rate parity, and Section VII report results for the sacrifice ratios.
In later studies, sacrifice ratios have been estimates by using VAR models.
Monetary policy and macroeconomic stabilization; the roles of optimum currency areas, sacrifice ratios, and labor market adjustment.
In Section III, we identify disinflation episodes in annual and quarterly data for 17 Organization of Economic Co-operation and Development (OECD) countries and calculate the sacrifice ratios.
The method of disinflation episodes involves determining the endpoints of each episode through inspection of changes in inflation rates and then calculating sacrifice ratios over each predetermined episode based on assumptions about unemployment or output gaps.
For example, the difference between the sacrifice ratios for Canada and the United States is a result of a larger weight on lagged CPI inflation in the Canadian price block (0.
15) The sacrifice ratios obtained from results using the Grande region unemployment gap for Luxembourg [1.
Also, Jordan (1997) estimates what he calls "benefice ratios" as well as sacrifice ratios.
Uncontrolled regressions of sacrifice ratios on central bank independence will likely have significant omitted variable bias toward a smaller effect as nominal rigidity flattens the Phillips curve.
5) Okun actually reported a wide range of sacrifice ratios corresponding to the range of estimates of the Phillips curve slope in the literature.
Comparison of the sacrifice ratios depicted in Diagram 16 with those recorded for earlier disinflation periods (e.