Irving Fisher's debt deflation analysis: From thePurchasing Power of Money(1911) to theDebt-deflation Theory of the Great Depression(1933)
Year: 2013
Type: article
Abstract: In 1933, Irving Fisher proposed an explanation for the Great Depression based on the distinction between the price level and price change effect of deflation in a context of over-indebtedness. This paper compares the debt-deflation theory of Fisher (Citation1933) with the dynamic depression process he had expounded almost 20 years earlier in the Purchasing Power of Money (1911). The role played by both price level and price change effects in the analyses of Fisher (1933, 1911) are clarified in the context of the disequilibrium model of Tobin (Citation1975). More precisely, we show that the stationary equilibrium is assumed to be locally unstable according to Fisher's 1911 insights and globally unstable according to his 1933 analysis.
Author: Michael Assous
Language: English
Topic: Economic Theory and Policy
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W2005804338