Friday, September 21, 2007

More On Inflation Targeting

New Zealand, Australia, U.K., Sweden and Norway have all adopted inflation targets, which have apparently contributed to either currency stabilization (UK, Sweden and Norway) or currency appreciation (Australia and New Zealand). The U.S. stands alone in the chart above, as the one country with a depreciating currency over the last 6 years, and also the one country among the group without an inflation target.

And the currency appreciation in New Zealand and Australia appartently haven't had any adverse effects, the unemployment rate in New Zealand is at a 20-year low, and the jobless rate in Australia is the lowest in 30 years, since the late 1970s.


At 9/23/2007 12:51 AM, Anonymous Anonymous said...

1. But if the US$ started rising, all other currencies would be falling. That's OK? Why?

2. All prices rise, fall, remain steady, at various times & places. Why shouldn't exchange rates do the same?


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