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Structural estimates of the South African sacrifice ratio

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  • Hayelom Yrgaw Gereziher
  • Naser Yenus Nuru

Abstract

This paper estimates the output cost of fighting inflation—the sacrifice ratio—for the South African economy using quarterly data spanning the period 1998Q1-2019Q3. To compute the sacrifice ratio, the structural vector autoregressive model developed by Cecchetti and Rich (2001) based on Cecchetti (1994) is employed. Our findings show us a small sacrifice ratio, which lies within the range 0.00002-0.231 per cent with an average of 0.031 per cent, indicating a low level of output to be sacrificed while fighting inflation.

Suggested Citation

  • Hayelom Yrgaw Gereziher & Naser Yenus Nuru, 2021. "Structural estimates of the South African sacrifice ratio," WIDER Working Paper Series wp-2021-12, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2021-12
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    References listed on IDEAS

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    Cited by:

    1. Christopher Loewald & Nic Spearman Andreas Wrgtter, 2023. "Less sacrifice from collective to competitive price coordination in the South African economy," Working Papers 11049, South African Reserve Bank.
    2. Chris Loewald & Konstantin Makrelov & Ekaterina Pirozhkova, 2022. "TheshorttermcostsofreducingtrendinflationinSouthAfrica," Working Papers 11029, South African Reserve Bank.

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    Keywords

    Monetary policy; Inflation targeting; Output; Sacrifice ratio; South Africa; Structural VAR;
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