This paper reassesses the Fisher effect using German data. It argues that the empirical rejection of the Fisher effect in previous studies, i.e., the finding of nominal interest rates not fully adjusting to changes in inflation, may be attributed to the particular time series behavior of...

Discount rate changes always receive considerable attention in financial markets and a bulk of empirical papers shows that asset markets react to them. However, among researchers, there is no consensus yet about why markets respond to such changes. This paper analyses this issue for the...