Around the world with Irving Fisher |
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| Affiliation: | 1. University of Iceland, 101 Reykjavík, Iceland;2. University of Iceland, Iceland;3. Birkbeck College, London, United Kingdom;1. Assistant Professor Department of Computer Science and Engineering Anna University Regional Office, Madurai, Tamilnadu, India;2. Professor Department of Information Technology K.L.N.College of Engineering, Pottapalayam, Sivaganga, Tamil Nadu, India;1. Faculty of Business and Law, Deakin University, Geelong, Australia;2. Faculty of Business, Bond University, Gold Coast 4229, Australia;1. Aix Marseille Université, CNRS, Centrale Marseille, I2M, Marseille, France;2. University of Waterloo, Canada |
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| Abstract: | This paper aims to show why Irving Fisher's own data on interest rates and inflation in New York, London, Paris, Berlin, Calcutta, and Tokyo during 1825–1927 suggested to him that nominal interest rates adjusted neither quickly nor fully to changes in inflation, not even in the long run. In Fisher's data, interest rates evolve less rapidly than inflation and change less than inflation over time. Even so, the “Fisher effect” is commonly defined as a point-for-point effect of inflation on nominal interest rates rather than what Fisher actually found: a persistent negative effect of increased inflation on real interest rates. |
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| Keywords: | Fisher effect Inflation Interest rates |
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