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effect, in the context of India. His research was aimed at studying the impact of the changing rates inflation rates on nominal rates of interest over the period 1952-1977. Using both short and long-term interest rates, results of his study found that there was a positive relationship between expected rates of inflation and nominal rates of interest, supporting Fisher's hypothesis. In addition, Paul (1984) found that rises in expected rates of inflation were only partially passed on to nominal rates of interest, a finding highlighted by Fama (1975). On the contrary, a study by Payne and Ewing (1997) found no evidence of the Fisher effect in India. Applying the Johansesen cointegration methodology they assess the hypothesis in 9 developing countries (Argentina, Fiji, India, Niger, Thailand, Malaysia, Sri Lanka, Singapore and Pakistan) but could only fully confirm the fisher effect in Sri Lanka, Pakistan and Malaysia. Other, significant studies of the Fisher hypothesis in the context of India include Nachane (1988) and Bhanumurthy and Agarwal (2002). Nachane (1988) finds that the administering of interest rates in India during the time was the reasoning behind not being able to find a one-for-one relationship between monthly interest rates and expected rates of inflation over the period 1970-1985. Bhanumurthy and Agarwal (2002) research the long-run relationship between nominal interest rates and expected inflation and utilize 3 different interest rates (Call money rate, Commercial paper and 364 day- Treasury bill rates) and rates of inflation. In their examination of monthly Indian data over the period 1990-2001 using an autoregressive distributed lag method, they could not find evidence to support the fisher relation. Thenmozhi and Radha (2005) also take into account the administering of interest rates in India and explore the short and long run movements of nominal interest rates and inflation. Employing cointegration techniques and error correction model, their findings reveal a long relationship between yields on 91-day treasury bills and inflation. They use the error correction model to take into account the short run alteration needed for the long run relationship. With evidence of co-movement between nominal interest rates and expected rates of inflation, they accept the Fisher hypothesis. Sathye, Canberra, Sharma and Liu (2008) examine the fisher hypothesis in emerging economies and focus on validating the fisher effect in India based on short-term nominal interest rates and inflation. They carryout Augmented Dickey-Fuller unit root tests, utilize both the Engle-Granger and Johansen-Juselius cointegration techniques, and carry out Granger causality tests with Error correction model to determine the nature of the relationship between the two variables. Using monthly data over the period 1996-2004 they do not reject the existence of the Fisher effect in India, as results from both cointegration tests indicate a cointegrating relationship between short-term interest rates and expected rates of inflation. Sathye, Canberra, Sharma and Liu (2008) also show that “expected inflation is Granger caused by nominal short-term interest rates”, conveying the positive ability of short-term nominal interest rates in predicting future inflation.

Many researchers have endeavored to try and justify, why the Fisher effect may not be present, and why it cannot be proved to the same extent as first hypothesized by Fisher (1930). S