Investigating the Presence of Fisher Effect for the China Economy
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Date
2018
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Sosyoekonomi Soc
Access Rights
info:eu-repo/semantics/openAccess
Abstract
In economic science, Fisher effect is known as the long run relationship between interest rates and inflation rates. According to Fisher, when economy at the full employment, increase in inflation is fully reflects to the nominal interest rates. Fisher equation is used to formulate the relationship between inflation and interest rates. Equation stands out the evidence about money growing, inflation and rates. In this study, the validity of fisher effect for China was tested over the period 1996: 01 2015: 03, the long run relationship between nominal interest rate and inflation rate was examined by using ARDL Bounds Testing Approach which was developed by Peseran et al. Before ARDL, theoretical background of Fisher Effect was explained. Following the literature survey, stationary situations were tested by Augmented Dickey Fuller unit root test. After that Autoregressive-Distributed Lag Bounds Test was applied on variables. According to result of study, the presence of fisher effect in China was supported.
Description
Keywords
Interest Rate, Inflation, Fisher Effect, Error Correction Model, Co-integration Analysis, ARDL Bounds Test
Journal or Series
Sosyoekonomi
WoS Q Value
N/A
Scopus Q Value
N/A
Volume
26
Issue
35
