Sacrifice Ratio

(redirected from Sacrifice Ratios)

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 above Table 5, nonlinear regression model is showing different sacrifice ratios, such as it is shown that in less persistent regime the cost of slowing down of economic growth in order to check the inflation trend is different to high persistent regime.
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. Section VIII concludes.
Sacrifice ratios have received much attention because of deflation in most developed countries.
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. We show that the sacrifice ratio depends on inflation history in Section IV.
"Central Bank Independence and Sacrifice Ratios: Some Further Considerations," Open Economies Review, 11 (2), April, 2000, pp.
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 (0.13 for Canada versus 0.03 for the United States).
As implied by a comparison of "sacrifice ratios" (expressing the NAIRU gap required during one year to bring inflation down by one per cent), (14) the evidence for a higher coefficient of the NAIRU gap in inflation equations for Luxembourg is weak at best.
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.g.