International Fisher Effect by Adán Francisco Broca Toscano https://padlet.com/adanjrutm/gryj7579i2f1ewqo Activity 09 International Finances en-us 2025-03-16 05:32:46 UTC 2025-03-16 05:52:41 UTC hello@padlet.com https://padlet.net/icons/8.0/png/1f4b1.png Higher Home Inflation and Interest Rate vs. Foreign Country adanjrutm https://padlet.com/adanjrutm/gryj7579i2f1ewqo/wish/3367622720 Brazil

  • Inflation: 1.974.83%

  • Interest Rate: 12.25%

  • IFE: -2.004

Implications

  • Depreciation of the Mexican peso

  • Imports from Brazil become more expensive

    • Reduced demand

  • Exports to Brazil become cheaper

    • Increased competitiveness

]]> 2025-03-16 05:36:16 UTC https://padlet.com/adanjrutm/gryj7579i2f1ewqo/wish/3367622720 Mexico's Inflation and Interest Rate adanjrutm https://padlet.com/adanjrutm/gryj7579i2f1ewqo/wish/3367623037 Mexico (Inflation: 4.21%, Interest Rate: 10%)

]]> 2025-03-16 05:37:47 UTC https://padlet.com/adanjrutm/gryj7579i2f1ewqo/wish/3367623037 Lower Home Inflation and Interest Rate vs. Foreign Country adanjrutm https://padlet.com/adanjrutm/gryj7579i2f1ewqo/wish/3367623614 Peru

  • Inflation: 1.97%

  • Interest Rate: 5%

  • IFE: 4.761

Implications

  • Appreciation of the Mexican peso

  • Imports from Peru become cheaper

    • Increased demand

  • Exports to Peru become more expensive

    • Reduced competitiveness

]]> 2025-03-16 05:39:36 UTC https://padlet.com/adanjrutm/gryj7579i2f1ewqo/wish/3367623614 Similar Home and Foreign Inflation and Interest Rates adanjrutm https://padlet.com/adanjrutm/gryj7579i2f1ewqo/wish/3367624672 Colombia

  • Inflation: 5.2%

  • Interest Rate: 9.5%

  • IFE: 0.456

Implications

  • Minimal appreciation or stable peso

  • Imports and exports remain stable

    • Balanced trade

]]> 2025-03-16 05:43:49 UTC https://padlet.com/adanjrutm/gryj7579i2f1ewqo/wish/3367624672 International Fisher Effect adanjrutm https://padlet.com/adanjrutm/gryj7579i2f1ewqo/wish/3367626161 According to the Fisher effect, real interest rates are determined by the nominal interest rate and the expected rate of inflation. In other words, if inflation is expected to be high, nominal interest rates will also be high. This is because lenders will want to be compensated for the loss in purchasing power that comes with inflation.

]]> 2025-03-16 05:47:47 UTC https://padlet.com/adanjrutm/gryj7579i2f1ewqo/wish/3367626161 Irving Fisher adanjrutm https://padlet.com/adanjrutm/gryj7579i2f1ewqo/wish/3367627045 The Fisher effect, named after economist american economist Irving Fisher (1867–1947) known for his contributions to monetary theory, interest rates, and the quantity theory of money.

]]> 2025-03-16 05:50:59 UTC https://padlet.com/adanjrutm/gryj7579i2f1ewqo/wish/3367627045 The Fisher Effect adanjrutm https://padlet.com/adanjrutm/gryj7579i2f1ewqo/wish/3367627416 According to the Fisher effect, the nominal interest rate is equal to the sum of the real interest rate and the expected inflation rate. In other words, if the inflation rate is expected to be 2% and the real interest rate is 1%, then the nominal interest rate must be 3%.

]]> 2025-03-16 05:52:40 UTC https://padlet.com/adanjrutm/gryj7579i2f1ewqo/wish/3367627416