In an excel spreadsheet, calculate the real interest rate over the past 24 months (using monthly...

In an excel spreadsheet, calculate the real interest rate over the past 24 months (using monthly data) for the 30 year Treasury bond rate as the nominal interest rate and assuming that expected inflation was equal to actual inflation (based on the change in CPI). Make sure to include the Fisher Equation.

Expert Solution

The Fisher Effect states that the real interest rate equals the nominal interest rate minus the expected inflation rate. Therefore, real interest rates fall as inflation increases, unless nominal rates increase at the same rate as inflation.

Sno	month	30 year treasury bind rate (nominal interest rate)	percentage change in CPI (inflation )	real interest rate
1	June,2018	2.983	2.9	0.083
2	July,2018	3.083	2.9	0.183
3	August,2018	3.01	2.7	0.31
4	September,2018	3.197	2.5	0.697
5	October,2018	3.402	2.3	1.102
6	November,2018	3.311	2.2	1.111
7	December,2018	3.02	1.9	1.12
8	January,2019	3.005	1.6	1.405
9	February,2019	3.083	1.5	1.583
10	March,2019	2.822	1.9	0.922
11	April,2019	2.94	2	0.94
12	May,2019	2.583	1.8	0.783
13	June,2019	2.528	1.6	0.928
14	July,2019	2.527	1.8	0.727
15	August,2019	1.97	1.7	0.27
16	September,2019	2.121	1.7	0.421
17	October,2019	2.176	1.8	0.376
18	November,2019	2.202	2.1	0.102
19	December,2019	2.389	2.3	0.089
20	January,2020	2.015	2.5	-0.485
21	February,2020	1.671	2.3	-0.629
22	March,2020	1.351	1.5	-0.149
23	April,2020	1.266	0.3	0.966
24	May,2020	1.407	0.1	1.307
25	June,2020	1.409	0.6	0.809

Rahul Sunny answered 2 years ago

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