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Fisher Effect in Post-Unification Germany - Insights for Firms, Central Banks and Governments

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  • Friesendorf, Cordelia
  • Durai, S. Raja Sethu

Abstract

Irving Fisher's (1930) hypothesis is a pillar in international economic theory used by Central banks and financial ministries to assess the impact of real and nominal variables that are essential for firm-level growth. This paper examines the validity of generalized Fisher's hypothesis for post-unification Germany for the time-period beginning January 1991 until March 2020 through a frequency-time domain framework using continuous wavelet analysis. We make two inferences from the empirical analysis; first, the generalized Fisher hypothesis holds perfectly well for the study period. Second, the relationship between real stock return and inflation exhibited in the post-financial crisis period is attributed to the indirect growth effects of the Germany's overall domestic product. The results provide valuable insights for firms, banks and governments.

Suggested Citation

  • Friesendorf, Cordelia & Durai, S. Raja Sethu, 2021. "Fisher Effect in Post-Unification Germany - Insights for Firms, Central Banks and Governments," Research Journal for Applied Management (RJAM), International School of Management (ISM), Dortmund, vol. 2(1), pages 53-67.
    • Handle: RePEc:zbw:ismrja:324718
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    References listed on IDEAS

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    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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