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Sacrifice Ratio

What is the 'Sacrifice Ratio'

The sacrifice ratio is an economic ratio that measures the costs associated with slowing down economic output to change inflationary trends. The ratio is calculated by taking the cost of lost production and dividing it by the percentage change in inflation, and its quotient gives the loss of output per 1% change in inflation:

Explaining 'Sacrifice Ratio'

If inflation is becoming a problem, central banks will try to cool economic growth in a bid to reduce inflationary pressures. However, this reduction in output costs the economy in the short term, and the sacrifice ratio tries to measure that cost.


Further Reading


Disinflation in a DSGE perspective: Sacrifice ratio or welfare gain ratio?
www.sciencedirect.com [PDF]
… Disinflation is a long-standing issue in monetary economics … We note first of all that the theoretical sacrifice ratios are positive and in line with the existing empirical estimates … In particular, the sacrifice ratio turns out to be approximately 1.05 when ϕ = 1.5 ; whereas it takes up a …

Monetary policy transparency, inflation and the sacrifice ratioMonetary policy transparency, inflation and the sacrifice ratio
onlinelibrary.wiley.com [PDF]
… Disinflation is a long-standing issue in monetary economics … We note first of all that the theoretical sacrifice ratios are positive and in line with the existing empirical estimates … In particular, the sacrifice ratio turns out to be approximately 1.05 when ϕ = 1.5 ; whereas it takes up a …

Central bank independence, speed of disinflation and the sacrifice ratioCentral bank independence, speed of disinflation and the sacrifice ratio
link.springer.com [PDF]
… Disinflation is a long-standing issue in monetary economics … We note first of all that the theoretical sacrifice ratios are positive and in line with the existing empirical estimates … In particular, the sacrifice ratio turns out to be approximately 1.05 when ϕ = 1.5 ; whereas it takes up a …

Sacrifice Ratios with Long‐Lived EffectsSacrifice Ratios with Long‐Lived Effects
onlinelibrary.wiley.com [PDF]
… Disinflation is a long-standing issue in monetary economics … We note first of all that the theoretical sacrifice ratios are positive and in line with the existing empirical estimates … In particular, the sacrifice ratio turns out to be approximately 1.05 when ϕ = 1.5 ; whereas it takes up a …

Exchange-rate pass through, openness, and the sacrifice ratioExchange-rate pass through, openness, and the sacrifice ratio
www.sciencedirect.com [PDF]
… Disinflation is a long-standing issue in monetary economics … We note first of all that the theoretical sacrifice ratios are positive and in line with the existing empirical estimates … In particular, the sacrifice ratio turns out to be approximately 1.05 when ϕ = 1.5 ; whereas it takes up a …

Sacrifice ratio dispersion within the Euro Zone: what can be learned about implementing a single monetary policy?Sacrifice ratio dispersion within the Euro Zone: what can be learned about implementing a single monetary policy?
www.tandfonline.com [PDF]
… Disinflation is a long-standing issue in monetary economics … We note first of all that the theoretical sacrifice ratios are positive and in line with the existing empirical estimates … In particular, the sacrifice ratio turns out to be approximately 1.05 when ϕ = 1.5 ; whereas it takes up a …

Central bank independence, disinflations, and the sacrifice ratioCentral bank independence, disinflations, and the sacrifice ratio
journals.sagepub.com [PDF]
… Disinflation is a long-standing issue in monetary economics … We note first of all that the theoretical sacrifice ratios are positive and in line with the existing empirical estimates … In particular, the sacrifice ratio turns out to be approximately 1.05 when ϕ = 1.5 ; whereas it takes up a …

Determinants of the sacrifice ratio: Evidence from OECD and non-OECD countriesDeterminants of the sacrifice ratio: Evidence from OECD and non-OECD countries
www.sciencedirect.com [PDF]
… Disinflation is a long-standing issue in monetary economics … We note first of all that the theoretical sacrifice ratios are positive and in line with the existing empirical estimates … In particular, the sacrifice ratio turns out to be approximately 1.05 when ϕ = 1.5 ; whereas it takes up a …


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