Studying the relation between inflation rate and interest rate based on Fisher's theory of the Iranian economy

Subject Areas : Financial Knowledge of Securities Analysis

پرویز  سعیدی ¹ (ندارد)
رضا  مظهری ² (ندارد)
حسن  ولیان ³ (مسئول مکاتبات)

Received: 2011-12-31 Accepted : 2012-04-08 Published : 2012-06-09

Keywords: Interest rate, Inflation Rate, the theory of Fisher,

Abstract :

This paper examines the main macroeconomic variables, including inflation andinterest rates will. Some policymakers and experts believe The increase in interestrates increase production costs and consequently increase the price level and inflation.On the other hand, according to economic theory, Increase in interest rates will rise ininflation rate. The aim of this research is to study relationship inflation rate with oneyear short term interest rate, Three-year medium-term interest rate and Long-terminterest rates(5 years) by using Least squares estimation methods and econometricmodels Fisher is a particular model. Purpose of interest rate in this study, Bank depositinterest rate is to be announced by the Central Bank of Iran And the inflation ratebased on the total index of consumer prices for goods and services in urban areas ofIran where the annual percentage change in prices (inflation) has been calculated bythe Central Bank, Is extracted. Data used in this study for a period of 18 years (1991-2009) is. Results indicate a significant relationship between inflation and interest ratesbe one year. And the inflation rate with The three-year and five years interest rate Notfound a significant relationship.