Estimations of the Sacrifice Ratio Through Dual Regimes: An Evidence from Indian Perspective

Devashish Sharma and Amritkant Mishra ()
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Devashish Sharma: Indian Council for Research on International and Economic Relations (ICRIER), New Delhi, Delhi 110003, India
Amritkant Mishra: Department of Economics, Birla Global University, Bhubaneswar, Odisha 751029, India

Journal of International Commerce, Economics and Policy (JICEP), 2023, vol. 14, issue 01, 1-28

Abstract: This investigation applies a VAR and an ARDL model to estimate the sacrifice ratio in the period of 1968–2018 subject to two regimes in India. The range for the sacrifice ratio mostly lies between −0.5 and 1 for the period of 1968–2002 while also experiencing sensitive shifts of −10 and 15. For the period of 2002–2018, the ratio lies between −3 and 5. Furthermore, the long run estimate of the sacrifice ratio is −2.35 and the short run is −0.35. It is concluded that the period of 1968–2002 was more sensitive and more prone to disinflationary costs than gains while the period of 2002–2018 is more resilient and is characterized by both costs and gains to disinflation. The gains from disinflation for the period of 2002–2018 exceed those of the period of 1968–2002. In a comparative perspective, the costs to disinflation for India are much less than the usual range of the sacrifice ratio for advanced economies.

Keywords: Sacrifice ratio; dual regimes; ARDL and inflation (search for similar items in EconPapers)
JEL-codes: E20 E25 E27 E64 E69 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1142/S1793993323500060

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