Irving Fisher (1867–1947)

Who They Were

Irving Fisher (1867-1947) was an American economist, based for much of his career at Yale University, and one of the founders of modern mathematical and monetary economics. Working from the late nineteenth century into the mid-twentieth, he made lasting contributions to the theory of interest, money, prices and index numbers, combining rigorous theory with a concern for practical measurement. He was among the first American economists to bring formal mathematical methods to the subject. Alongside contemporaries such as Wesley Mitchell, he helped shape the empirical study of the economy. His theoretical work on money and debt remains a standard part of macroeconomics, and several concepts and formulas still carry his name.

Key Contributions

Fisher gave economics several enduring tools. The Fisher equation links nominal interest rates, real interest rates and expected inflation, and his equation-of-exchange formulation expressed the quantity theory of money. His debt-deflation theory showed how falling prices raise the real burden of debt, potentially driving a downward economic spiral - an analysis given fresh relevance by later financial crises. In The Making of Index Numbers (1922) he evaluated dozens of possible formulas against desirable properties and identified what is still called the Fisher ideal index, the geometric mean of the Laspeyres and Paasche indexes. These ideas recur throughout economics teaching: the Fisher equation appears in the study of interest rates, the financial sector and the open economy, while his index-number work underlies modern inflation measurement.

On EconRecall

American economist and monetary theorist behind the Fisher equation, debt-deflation, and pioneering work on index numbers. Play the games that feature Irving Fisher:

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