When inflation accelerates, various economic and social costs, including rising transaction costs, distorted resource allocation and growing uncertainties, are incurred and the costs of disinflation arise in the process of a central bank's dealing with inflation in pursuit of price stability. In general, disinflation costs are measured by the sacrifice ratio, the short-term production loss caused in the process of slowing inflation. The sacrifice ratio has a limit in that it is estimated as a fixed value without regard of factors like the business cycle phase, the inflation level and a disinflation factor, as deduced by ex post calculation of changes in inflation and the output gap during a certain period.

※ Please refer to the attached file.