Impact of inflationary uncertainties on sacrifice ratio in developing countries

Inflation is a continuous and unavoidable problem in some developing countries. Disinflationary policies or controlling inflation leads to real costs for economy. Estimation of the costs of disinflation policy is usually done using the sacrifice ratio (SR) coefficient. This study examines the impact of inflationary uncertainty on sacrifice ratio in 31 developing countries, by average of inflation, inflationary uncertainties, openness rate for 31 countries in 1981-2015. By use of GARCH model we get Access to Inflationary uncertainties time series. Results showed there is direct relation between inflation and SR, also there is positive relation between inflationary uncertainties and SR. openness rate of economic can’t explain any effects on SR. biases and inflationary uncertainties decrease the speed of disinflationary policies and makes the SR much bigger. Because of the importance of SR, it is good to decrease inflation with the least real costs by controlling liquidity and inflationary expectations.