Abstract:

The aim of this study is to determine the validity of Fisher’s impact in developed and developing countries that adopt inflation targets. For this purpose, the study used the Fourier equalization analysis. According to the analysis, in developed and developing countries that adopt inflation targets, there is no matching relationship between both short and long-term interest rates and inflation rates. In other words, the Fisher effect is not applicable in the countries involved in the study. Failure to move along with the interest rate and inflation rate in the long term causes increased uncertainty and a decrease in trust in the economy with predictability. This has a significant impact on investment and savings. Therefore, the central banks in these countries need to monitor monetary policy in an increasing way of both predictability and confidence in the economy.