Question

Distinguish between fisher effect and international fisher effect

Answer 1

The International Fisher Effect (IFE) states that the difference between the nominal interest rates. ... The International Fisher Effect is based on current and future nominal interest rates, and it is used to predict spot and future currency movements. The IFE is in contrast to other methods that use pure inflation.

Answer 2

Answer:

The International Fisher Effect expands on the Fisher Effect (the two are different, interchangeable, but related models. The Fisher Effect defines the connection between the rate of inflation and interest rates. It suggests that the nominal rate of an economy is equal to the inflation rate plus the real interest rate.