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Around the world with Irving Fisher

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  • Gylfason, Thorvaldur
  • Tómasson, Helgi
  • Zoega, Gylfi

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.

Suggested Citation

  • Gylfason, Thorvaldur & Tómasson, Helgi & Zoega, Gylfi, 2016. "Around the world with Irving Fisher," The North American Journal of Economics and Finance, Elsevier, vol. 36(C), pages 232-243.
    • Handle: RePEc:eee:ecofin:v:36:y:2016:i:c:p:232-243
    DOI: 10.1016/j.najef.2016.01.004
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    2. Basse, Tobias & Wegener, Christoph, 2022. "Inflation expectations: Australian consumer survey data versus the bond market," Journal of Economic Behavior & Organization, Elsevier, vol. 203(C), pages 416-430.
    3. Thorvaldur Gylfason, 2017. "Negative Interest," The American Economist, Sage Publications, vol. 62(2), pages 139-148, October.

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    More about this item

    Keywords

    Fisher effect; Inflation; Interest rates;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects

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