What determines the sacrifice ratio? A Bayesian model averaging approach

Hajime Katayama, Natalia Ponomareva*, Malvin Sharma

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

4 Citations (Scopus)


Existing empirical studies on the sacrifice ratio (measuring the output cost of disinflation) consider a large number of potential explanatory variables including the length of disinflation, various institutional settings, economic conditions, and the political climate. Some results are robust across different studies, while others are not. We address the presence of model uncertainty by using the Bayesian model averaging method to identify the important determinants of the sacrifice ratio, without relying on ad hoc model selection. Our results show that the length of disinflation is the most important variable. This supports the ‘cold turkey’ argument for faster disinflation.

Original languageEnglish
Pages (from-to)960-988
Number of pages29
JournalOxford Bulletin of Economics and Statistics
Issue number5
Publication statusPublished - 1 Oct 2019


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