The Fisher Hypothesis and International Capital Markets
Bibliographic Data
| ID | 10177424 |
|---|---|
| Authors | Ingemar Hansson, Charles Stuart (0000-0001-5170-9026) |
| Year | 1986 |
| Volume | 94 |
| Issue | 6 |
| Pages | 1330-1337 |
| Publication date | 1986-12-01 |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0022-3808 • E-ISSN: 1537-534X |
| Publisher | University of Chicago Press (PUBLISHER • US) |
| DOI | 10.1086/261436 |
| OpenAlex | W2045711594 |
| Language | EN |
| References cited | 4 |
In a closed economy with interest taxes at rate τ and with a constant real et rate of interest, the nominal rate of interest should rise by 1/(1 - τ) points for every point rise in the expected rate of inflation. However, a large body of empirical work examines the determinants of nominal interest rates and generally finds that the coefficient of expected inflation is close to or less than one. We model the determination of interest rates in an open economy with taxes. Under plausible conditions, increases in inflation cause the nominal interest rate to rise roughly point for point. This suggests that open-capital-market considerations are central for understanding aggregate economic behavior. The analysis also suggests that inflation is not neutral with respect to the real net interest rate earned by domestic savers or paid by domestic borrowers
Capital (architecture · Econometrics · Economics · Fisher equation · Fisher hypothesis · Inflation (cosmology · Interest rate · International Fisher effect · Macroeconomics · Monetary economics · Nominal interest rate · Point (geometry · Real interest rate · Economic theories and models · Economic Theory and Policy · Monetary Policy and Economic Impact
| Highly cited | No |
|---|