Sometimes the real interest rate is calculated as [(1+nominal) / (1+inflation)] - 1 and sometimes it is (nominal - inflation) like in the Fisher relation. Can someone tell me if there is a rule regarding that?
Thanks,
Sometimes the real interest rate is calculated as [(1+nominal) / (1+inflation)] - 1 and sometimes it is (nominal - inflation) like in the Fisher relation. Can someone tell me if there is a rule regarding that?
Thanks,
Both are very approximated, however the most accurate form should be (1+nominal)/(1+inflation) - 1