Abstract:

The one of the most fundamental problems of high inflation rates in many developing countries such as Turkey, the effect the interest rate on the inflation rate is still under debate. In this study, it has been examined the Fisher Effect, which is a counterpart of this situation in the economics literature. In this direction, the Hatemi-J (2012) asymmetric causality test was conducted using monthly inflation and interest data between January 2005 and October 2020. As a result of the study, it was determined that there is a causality relationship between inflation and interest rates in general. In the analysis made by dividing the variables into positive and negative shocks, it was determined a bidirectional symmetrical causality relationship between the increase in inflation and the increase in interest rates. However, it has been observed that the increase in interest rates affects inflation both symmetrically and asymmetrically. Referring to the findings obtained from studies, it was concluded to be valid the fisher hypothesis for the years 2005-2020 in Turkey.

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