TY - JOUR
T1 - Purchasing power, interest rate parities and the modified Fisher effect in presence of tax agreements
AU - BenZion, Uri
AU - Weinblatt, J.
PY - 1984/1/1
Y1 - 1984/1/1
N2 - This paper shows that in a world with different rates of inflation and taxation, in the presence of an international tax agreement, the simultaneous coexistence of the purchasing power parity mechanism, the interest rate parity mechanism, and the revised Fisher effect is impossible. The analysis reveals a possible inherent instability of interest rates and exchange rates generated by inflation. This instability is greater the larger the tax rate differentials among countries.
AB - This paper shows that in a world with different rates of inflation and taxation, in the presence of an international tax agreement, the simultaneous coexistence of the purchasing power parity mechanism, the interest rate parity mechanism, and the revised Fisher effect is impossible. The analysis reveals a possible inherent instability of interest rates and exchange rates generated by inflation. This instability is greater the larger the tax rate differentials among countries.
UR - http://www.scopus.com/inward/record.url?scp=0002964177&partnerID=8YFLogxK
U2 - 10.1016/0261-5606(84)90030-5
DO - 10.1016/0261-5606(84)90030-5
M3 - Article
AN - SCOPUS:0002964177
SN - 0261-5606
VL - 3
SP - 67
EP - 73
JO - Journal of International Money and Finance
JF - Journal of International Money and Finance
IS - 1
ER -
