Before Philips there was FIsher: How Irving Fisher first estimated the statistical relationship between inflation and unemployment

I didn’t know this at all. But then trust Irving Fisher to have worked out most of the macroeconomic relationships before others.

Came across this paper by Fisher where he had estimated the relationship between inflation and unemployment in 1926 for US economy. Philips estimated the relationship for UK economy in 1958. So before Philips there as Fisher:

The possible relation between changes in the price level and changes in the volume of employment, much discussed by economists at the present time, has already been debated in the pages of the Review. In the present article Professor Fisher, one of the foremost authorities on monetary problems and for years a protagonist of stabilisation, removes the question from the sphere of controversy to that of exact statistical research. He has found a remarkably high correlation between the rate of price changes and employment, and he describes the methods by which he has achieved this result. The data used refer exclusively to the United States, and further research would be required before the conclusions could be applied directly to other countries. Nevertheless, this objective statistical confirmation of a relation long asserted to exist is a highly important step in advance.

The paper is based on old style writing where one took a lot of care to explain the stats relationships. Unlike today’s papers where there is just a jumboree of relationships and regressions and much of the figuring is left to the reader.  Even the way Prof Fisher explains whether one should take level or changes is quite something.

He also writes how he had dedicated atleast one computer in his office (how many did he have? ) to estimate the relationship between inflation and unemp for last three years! Just tells you the role computers have played in economics where these relationships can be estimated in a few seconds on a laptop…


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