NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

What Determines the Sacrifice Ratio?

Laurence Ball

NBER Working Paper No. 4306
Issued in March 1993
NBER Program(s):   EFG   ME

This paper investigates the determinants of the "sacrifice ratio" for disinflation: the ratio of the loss in output to the fall in trend inflation. I develop a method for estimating the sacrifice ratio in individual disinflation episodes, and apply it to 65 episodes in moderate-inflation OECD countries. In this sample. the sacrifice ratio is decreasing in the speed of disinflation: cold turkey is less costly than gradualism. The ratio is also decreasing in the flexibility of wage-setting institutions. The openness of the economy has no effect on the ratio. and the effects of incomes policies and the initial level of inflation are unclear.

download in pdf format
   (1222 K)

email paper

This paper is available as PDF (1222 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w4306

Published:

Users who downloaded this paper also downloaded these:
Svensson w10195 Escaping from a Liquidity Trap and Deflation: The Foolproof Way and Others
Ball What Determines the Sacrifice Ratio?
Blanchard and Summers w2035 Hysteresis in Unemployment
Ball and Mankiw w8940 The NAIRU in Theory and Practice
Ball and Sheridan w9577 Does Inflation Targeting Matter?
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us