The study reexamines the relationship between interest rates and inflation in Germany. Previous studies found that interest rates did not fully adjust to changes in inflation, but this was due to the specific behavior of inflation and interest rates over time. By using a threshold cointegration model, the researchers found that the full Fisher effect, including tax adjustments, was not rejected. This model not only explains previous biases in coefficient estimates but also addresses sample and country variations. The threshold cointegration model could be useful for testing other long-term relationships like uncovered interest rate parity or purchasing power parity.