Luckily, I used the weasel-word "exaggerated" which means that even if you're right, I'm right too. ;-)
Doug also wrote: >When the dollar declined in 1986 and 1987, inflation rose from below 2% to above 4%.< One difference was that during that period, the unemployment rate in both the US and the other rich countries listed in the ERP was falling. This time, though I don't have the stats in front of me, I believe that the unemployment rate in the "other rich countries" is rising. Jim Devine, e-mail: [EMAIL PROTECTED] ; web: http://myweb.lmu.edu/jdevine/ > -----Original Message----- > From: PEN-L list [mailto:[EMAIL PROTECTED] On Behalf Of Doug > Henwood > Sent: Monday, November 22, 2004 2:02 PM > To: [EMAIL PROTECTED] > Subject: Re: [PEN-L] Impact of dollar decline? > > Devine, James wrote: > > >I think this is exaggerated: excess capacity and unemployment > >discourage inflation. The inflation we have now in the US is mostly > >due to oil and medical costs, which have special explanations. > >There's no price/wage spiral at this point to be sped up by the > >dollar's fall. > > There will be a pretty mechanical feed-through from a weaker dollar > to higher import prices - though, the relative stability of the > Asian > currencies is keeping this under wraps so far. But historically, > major dollar declines have been usually accompanied by accelerations > in the CPI. > > Doug
