The sacrifice ratio has declined for the inflation-targeting countries.
2002, "Does a Higher Sacrifice Ratio Mean that Central Bank Independence Is Excessive?
2005, "Openness, the Sacrifice Ratio, and Inflation: Is There a Puzzle?
2004, "Central Banking Independence, Disinflations, and the Sacrifice Ratio," Comparative Political Studies, 37(4), 399-419.
This implies that in countries with high inflation, the Phillips curve is steeper and the sacrifice ratio is smaller.
Since our focus is the effect of inflation history on the sacrifice ratio, we experiment with several values of the mean lag.
In his study on disinflations in 18 Latin America and Caribbean countries, Hofstetter defines inflation history as a simple average of the inflation rate of the past 10 yr and examines the effect of inflation history on the sacrifice ratio.
Baltensperger and Kugler (2000) discuss how the sacrifice ratio can he affected by the degree of central bank independence.
Also, Jordan (1997) estimates what he calls "benefice ratios" as well as sacrifice ratios.
Dividing this sum by initial output gives the numerator of the sacrifice ratio.
The robustness of these estimates is a serious matter: They may overestimate the true sacrifice ratio if they ignore the role of real shocks to the economy, or they may underestimate the true cost for other reasons.
The 8th column of table 1 shows that most of the sacrifice ratios declined; the mean sacrifice ratio declined from 1.
0] is positive, implying that the duration of inflation is positively related to the expected sacrifice ratio.
To co ntrol for this important nonmonetary source of variation in the sacrifice ratio, we include the variable DOIL, the change in the real dollar price index of oil in the year prior to the disinflation.
Table 1 displays the OLS estimates of the sacrifice ratio model.