This paper critically re-examines theory and evidence on the relation- ship between interest rates and inflation. It … concludes that there is no evidence that interest rates respond to inflation in the way that classical or Keynesian theories … inflation in the short or long run. During the post-war period interest rates do appear to be affected by inflation. However …

fluctuations in expected inflation, is why a strong Fisher effect occurs only for certain periods but not for others. This paper … resolves this puzzle by reexamining the relationship between inflation and interest rates with modern time-series techniques …. Recognition that the level of inflation and interest rates may contain stochastic trends suggests that the apparent ability of …

We consider the puzzling behavior of interest rates and inflation in the United States and the United Kingdom between … World War I; the average inflation rate was 3.8 percentage points higher in the second period than in the first. Yet nominal … consistent with rational expectations if inflation were not forecastable, and indeed univariate tests show little sign of serial …

inflation rate is -.17. The corresponding correlation for the period 1950 to 1979 is .71. Inflation evolved from essentially a … stochastic process of inflation, rather than a change in any structural relationship between nominal rates and expectedi nflation …. I find little evidence of inflation non-neutrality in data from the gold standard period.This contradicts the conclusion …

inflation illusion. Illusionary investors mistake changes in nominal interest rates for changes in real rates, while smart … moves with expected inflation. The model also predicts a nonmonotonic relationship between the price-to-rent ratio on … developed. We document that many countries experienced a housing boom in the high-inflation 1970s and a second, stronger, boom …

This paper develops two models, one involving risk neutrality and the other risk aversion, which suggest that inflation … evidence supports the hypothesis that inflation uncertainty affects interest rates. Interpreted in terms of the risk neutral … model, the empirical results suggest that inflation uncertainty has a negative impact on nominal interest rates and a …