Fisher equation (费雪方程 fèi xuě fāngchéng) represents the quantitative relationship between national income level, price level and money supply. It states that the nominal interest rate is equal to the real interest rate plus expected inflation. The formula is expressed as i = r + π or1 + i = (1 + r) (1 + π), where i donates the nominal interest rate, r donates the real interest rate, and π donates the inflation rate.
- 费雪 (fèi xuě) is the transliteration of the name of economist Irving Fisher.
- 方程 (fāngchéng) as in a linear equation (线性方程 xiànxìng fāngchéng) or cubic equation (三次方程 sāncì fāngchéng).
Also see: Fisher effect.» Add a new term or correction« Back to Glossary Index