Remembering Irving Fisher..

It has been 100 years since Fisher wrote his book The Purchasing Power of Money.

Robert Shiller pays tribute to the book and points Fisher has some important lessons for the crisis.

It is the 100th anniversary of Irving Fisher’s 1911 book The Purchasing Power of Money. But, more important than that, it is a good time, during the current financial turmoil, to reconsider some of his theories again, in light of current events. And I think that some of his theories about variations in the purchasing power of money are very important today, have been underappreciated, and are worthy of considering anew. 

In that 1911 book he described a theory of financial crises that tied them to over-borrowing during the expansion phase that preceded the crisis, and to the changes in the purchasing power of money that this expansion causes, then to the collapse in credit and the drop in the price level. This idea reached its best exposition in his 1933 article ““The Debt Deflation Theory of Great Depressions.”

Hmmm.

He points how Fisher was a leading advocate of inflation indexed bonds and mentioned them in his 1911 book . These bonds were finally introduced in 1997.

Nice little note on Fisher..

Update:

The link to the paper has been fixed. Thanks Venkatesan for the pointer

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2 Responses to “Remembering Irving Fisher..”

  1. Venkatesan Says:

    Dear Amol,

    The above link is for the abstract on ‘Why Don’t People and Institutions Do What They Know They Should?’.

    Request you to provide the link for the tribute on Fisher’s book.

    regards
    Venkat

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