TY  - JOUR
AU  - Ball,Laurence
TI  - What Determines the Sacrifice Ratio?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4306
PY  - 1993
Y2  - March 1993
UR  - http://www.nber.org/papers/w4306
L1  - http://www.nber.org/papers/w4306.pdf
N1  - Author contact info:
Laurence M. Ball
Department of Economics
Johns Hopkins University
Baltimore, MD 21218
Tel: 410/516-7605
Fax: 410/516-7600
E-Mail: lball@jhu.edu
M1  - published as Laurence Ball. "What Determines the Sacrifice Ratio?," in N. Gregory Mankiw, ed., "Monetary Policy" The University of Chicago Press (1994)

M2  - featured in NBER digest on 1993-04-01
AB  - 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.
ER  -