Question: According to Figure New Zealand in the 1970s and 1980s
According to Figure New Zealand in the 1970s and 1980s combined high inflation with relatively little central bank independence. In 1989, New Zealand became the first country to adopt an inflation target. How did this policy regime shift affect inflation? Plot the inflation rate based on the percent change from a year ago of New Zealand’s “core” consumer price index (FRED code: CPGRLE01NZQ659N) beginning in 1970. Was inflation after 1990 lower and more stable than before? Download the data and compute the average and the standard deviation of inflation for: (a) the period through 1989; and (b) the period from 1990 to the present.
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