On The Fisher Effect: A Review

Mpho Bosupeng

MPRA Paper from University Library of Munich, Germany

Abstract: The Fisher effect proposes that in the long run, nominal interest rates trend positively with inflation. In numerous studies the long run Fisher effect has been proved several times as compared to the short run Fisher effect phenomenon. The reason is in the long run, interest rates exhibit minimum volatility therefore resulting in the long run association. Even though the literature has been impressive in terms of validating the hypothesis, many central banks and policy makers have been lost in the lurch regarding the overall standpoint of the Fisher parity. This paper reviews the Fisher effect and examines factors that impinge on the hypothesis namely: inflation targeting, data set range and the regulation of the financial system.

Keywords: Fisher effect; interest rates; inflation (search for similar items in EconPapers)
JEL-codes: E43 (search for similar items in EconPapers)
Date: 2016, Revised 2016
New Economics Papers: this item is included in nep-mac and nep-mon
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Citations: View citations in EconPapers (1)

Published in Journal for Studies in Management and Planning 2.7(2016): pp. 55-61

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:77916

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