Fisher hypothesis[1] - THE NON-STATIONARY AND TAX EFFECTS...

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THE NON-STATIONARY AND TAX EFFECTS RESULTS 1 The Non-Stationary and Tax Effects Results of the Fisher Hypothesis Jodi Bob RES 342 September 9, 2010 Paul L. Worthey, MBA, MA.Ed, BSIT
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THE NON-STATIONARY AND TAX EFFECTS RESULTS 2 The Fisher Hypothesis The long-term Fisher hypothesis relates the long-term nominal interest rate to an expected one period inflation rate. The analysis explores interest rates and inflation and the non- stationary process. The Fisher hypothesis tests the long-term coupon-bearing bonds when presuming nominal interest rates and inflation to be non-stationary stochastic processes. In the article descriptions on the issues of whether interest rates are measuring in pre-tax or after-tax terms. The hypothesis questions the usefulness that interest rates contain regarding future inflation and if it is a concern for policy-makers. Second, it questions whether monetary authorities are good indicators of pressures from inflation on the economy.
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