Around the World with Irving Fisher

20 Pages Posted: 9 Apr 2015

See all articles by Thorvaldur Gylfason

Thorvaldur Gylfason

University of Iceland - Faculty of Economics and Business Administration; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

Helgi Tomasson

University of Iceland - Faculty of Economics and Business Administration

Gylfi Zoega

University of Iceland; University of London - Birkbeck College; Centre for Economic Policy Research (CEPR)

Date Written: March 30, 2015

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 from 1825 to 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 have more persistence than inflation and change less than inflation over time. The Fisher effect is a misnomer unless it is taken to refer to what Fisher actually found and what his data show: a persistent negative effect of increased inflation on real interest rates.

Keywords: Fisher effect, inflation, interest rates

JEL Classification: E310, E430

Suggested Citation

Gylfason, Thorvaldur and Tomasson, Helgi and Zoega, Gylfi, Around the World with Irving Fisher (March 30, 2015). CESifo Working Paper Series No. 5257, Available at SSRN: https://ssrn.com/abstract=2591816

Thorvaldur Gylfason (Contact Author)

University of Iceland - Faculty of Economics and Business Administration ( email )

IS-101 Reykjavik
Iceland
+354 525 4533/00 (Phone)
+354 552 6806 (Fax)

HOME PAGE: http://www.hi.is/~gylfason/inenglish.htm)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Helgi Tomasson

University of Iceland - Faculty of Economics and Business Administration ( email )

IS-101 Reykjavik
Iceland

Gylfi Zoega

University of Iceland ( email )

IS-101 Reykjavik
Iceland

University of London - Birkbeck College ( email )

Malet Street
London, WC1E 7HX
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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