Testing for the long run relationship between nominal interest rates and inflation using cointegration techniques

Key Points

• The aim is to assess the long run relationship between nominal interest rates and inflation.
• Utilized cointegration techniques to analyze the data.
• Examined historical nominal interest rate and inflation datasets over time.
• Applied econometric models to determine stability in the relationship.
• Identified a significant long run relationship between nominal interest rates and inflation.
• Demonstrated that fluctuations in inflation impact nominal interest rates over time.
• Provided evidence supporting the use of cointegration analysis in economic studies.