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Irving Fisher, Debt Deflation, And Crises

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  • SHILLER, ROBERT J.

Abstract

This article reconsiders, in the light of the current financial turmoil, Irving Fisher’s 1911 theory of financial crises and his 1933 debt-deflation theory of Great Depressions. Particular attention is given to the role of high debt ratios, high leverage ratios, and changes in the purchasing power of money in Fisher’s analysis, and to Fisher’s compensated dollar plan to stabilize the purchasing power of money. It is argued that indexing the unit of account would accomplish Fisher’s goal of stabilization without the practical difficulties of Fisher’s compensated dollar plan.

Suggested Citation

  • Shiller, Robert J., 2013. "Irving Fisher, Debt Deflation, And Crises," Journal of the History of Economic Thought, Cambridge University Press, vol. 35(2), pages 179-183, June.
    • Handle: RePEc:cup:jhisec:v:35:y:2013:i:02:p:179-183_00
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    Cited by:

    1. Argandoña, Antonio, 2013. "Irving Fisher: un gran economista," IESE Research Papers D/1082, IESE Business School.
    2. Sigga Benediktsdottir & Soha Ahmed, 2023. "Interest Rate Normalization in a World with High Indebtedness," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 51(1), pages 39-63, March.
    3. Katalin Botos, 2022. "What Can Posterity Learn from Irving Fisher?," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 21(2), pages 175-187.
    4. Mosler, Martin & Schaltegger, Christoph & Mair, Lukas & Brandt, Przemyslaw, 2025. "Who Absorbs the Debt-Deflation Channel? Empirical Evidence from Historical Balance Sheets and the Great Swiss Deflation," VfS Annual Conference 2025 (Cologne): Revival of Industrial Policy 325423, Verein für Socialpolitik / German Economic Association.
    5. Pender, Casey, 2024. "Is deflation cause for panic? Evidence from the National Banking era," Journal of Macroeconomics, Elsevier, vol. 82(C).

    More about this item

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics

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