If the international Fisher effect (IFE) holds, the local investors are expected to earn the same return from investing internationally as they would from investing in their local markets.

Question

Quizplus · Accepted Answer

According to the IFE, there is a long-run equilibrium relationship between nominal interest rates and expected inflation rates across different countries. Therefore, if the IFE holds, local investors would be expected to earn the same return from investing internationally as they would from investing in their local markets.

If the International Fisher Effect (IFE) Holds, the Local Investors