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Theoretical and Applied Economics
No. 1 / 2020 (622), Spring

A review of international Fisher’s effect focusing on inflation in Indian context for corporate decisions

Sharath AMBROSE
Institute of Management Studies and Research, Kuvempu University, India
Dr. K.R. MANJUNATH
Institute of Management Studies and Research, Kuvempu University, India

Abstract. Any economic phenomenon is an outcome an unidentified robust and complex model than researched ones till date. One among such phenomena is inflation. There are many economic theories for inflation by classical economists till modern economist. This study tries to ease out the corporate decision by finding the causal relationship between inflation and macroeconomic variables. The basis of selecting the predictor variables is on a renowned theory called International Fishers Effect. Theory believes that disparity in the interest rates of two countries is adjusted by exchange rate of the currencies. Thus study intendeds to find the causal relationship of selected variables with inflation to make corporate decisions.

Keywords: corporate decision, causality, interest rate, exchange rate, inflation etc.

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