Inflation-output trade-off: old measures, new determinants?

Georgios Magkonis, Kalliopi-Maria Zekente

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This study analyses the determinants of the sacrifice ratio; i.e., the output cost of disinflation. The empirical literature so far has used several model specifications, indicating the degree of model uncertainty. Even for those factors where consensus on their significance has been reached, such as trade openness and central bank independence, considerable uncertainty still surrounds their estimated sign. Motivated by the above, we estimate the most important drivers of the sacrifice ratio based on Bayesian model averaging, for a panel data set of 42 countries. Our findings confirm part of the evidence reported in the prior empirical literature, while it sheds light on the importance of other factors.
Original languageEnglish
Article number103217
Number of pages16
JournalJournal of Macroeconomics
Early online date26 May 2020
Publication statusPublished - 1 Sep 2020


  • Sacrifice ratio
  • model uncertainty
  • model averaging


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