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Revista Brasileira de Economia

Print version ISSN 0034-7140On-line version ISSN 1806-9134

Abstract

GONCALVES, Carlos Eduardo S.  and  CARVALHO, Alexandre. Inflation targeting and the sacrifice ratio. Rev. Bras. Econ. [online]. 2008, vol.62, n.2, pp.177-188. ISSN 0034-7140.  http://dx.doi.org/10.1590/S0034-71402008000200003.

In this paper we show that economies that adopted the inflation targeting (IT) regime have been able to "disinflate" less costly. The effect of IT on the sacrifice ratio is not only statistically significant, but also economically very important. This result is all the more interesting given the lack ofrobust empirical evidence in favor of IT. By significantly reducing the short-run costs of disinflation, IT may render the attainability of lower inflation levels politically more feasible.

Keywords : Inflation Targeting; Sacrifice Ratio.

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