The impact of restrictive monetary policy in emerging countries

Akanksha Mishra and Amlendu Dubey

Structural Change and Economic Dynamics, 2025, vol. 74, issue C, 915-927

Abstract: We study the sacrifice ratios for 465 disinflationary episodes in emerging market and developing economies using a dataset of 123 countries during 1979 to 2023. We find that average output cost of disinflation was significantly higher during COVID-19 period as compared to the previous disinflationary episodes, suggesting that supply side disruptions elevated the output costs of monetary tightening during the period. Further, we find that speed of disinflation and peak inflation significantly reduce sacrifice ratios suggesting a role for “cold turkey” approach as against the gradualism.

Keywords: Sacrifice Ratio; Disinflation; Emerging Market and Developing Economies; COVID-19 (search for similar items in EconPapers)
JEL-codes: E31 E42 E52 E58 F41 F60 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:74:y:2025:i:c:p:915-927

DOI: 10.1016/j.strueco.2025.06.016

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