Fisher, Irving

AbstractThe American economist Irving Fisher (1867–1947) of Yale University introduced general equilibrium analysis into North American economics in his 1891 dissertation, and went on to become a leading monetary and capital theorist. The “Fisher equation” of hisAppreciation and Interest(1896) viewed nominal interest as the sum of real interest and expected inflation (which he later modeled as a distributed lag of price changes). The “Fisher diagram” ofThe Rate of Interest(1907) showed optimal consumption and saving in a two‐period model, the basis of all subsequent analyses of intertemporal allocation. Fisher'sThe Purchasing Power of Money(1911) restated the quantity theory of money, with monetary shocks driving output fluctuations in the short run but affecting only nominal variables in the long run. His 1926 paper correlating unemployment and a distributed lag of inflation was reprinted in 1973 as “Lost and Found: I Discovered the Phillips Curve—Irving Fisher.” The “Fisher index”, the geometric mean of the Paasche and Laspeyres indexes, is now widely used as an index number. Emphasizing that inflation makes money and bonds risky, Fisher was an enthusiast for investment in common stocks in the 1920s. He shattered his public reputation with his October 1929 statement that stock prices had reached a permanently high plateau.