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EconoQuantum

On-line version ISSN 2007-9869Print version ISSN 1870-6622

Abstract

LORIA, Eduardo; TIRADO, Raúl  and  VALDEZ, Javier. Estimation for México’s sacrifice ratio, 1998Q1-2018Q4. EconoQuantum [online]. 2020, vol.17, n.1, pp.47-67.  Epub June 04, 2020. ISSN 2007-9869.  https://doi.org/10.18381/eq.v17i1.7152.

Romer and Romer (1989) demonstrated for the United States that monetary policy is capable of reducing inflation only by generating economic recession. So, the disinflationary policy applied by the Banco de Mexico has a cost in output and employment, thus, is not socially neutral.

With an Accelerationist Phillips Curve in terms of the unemployment gap, we calculated the sacrifice ratio for Mexico (2002Q1-2018Q4) and found that the unemployment gap needed to reduce inflation by one point is 2.525 percentage points.

We proved that this Phillips Curve is linear and does not have structural changes. We suggest that, since “el corto” was abandoned in 2008, monetary policy has gained efficiency. Moreover, the loss of employment generated is transitory because the economy does not shift from its medium-term equilibrium.

Keywords : Sacrifice ratio; disinflationary policy; Neo-Keynesian Accelerationist Phillips Curve; C5; E31; E43; E52.

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