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The great depression in Irving Fisher's Work

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  • Giovanni Pavanelli

    (University of Turin - Dipartimento di Scienze Economiche e Finanziarie “G. Prato”)

Abstract

This paper oVers a critical re-examination of Fisher’s views on the origin of the Great Depression, his “debt-deXation theory” and the policy measures he advocated. On the eve of the stock market crash in October 1929 Fisher predicted that the share prices were not overvalued and that their increase was due to new proWt opportunities created by technological innovation and sharp rises in productivity. As the Depression worsened, however, he became convinced that new theoretical explanations were needed and presented a new model (debt-deXation theory) based on the interaction of real and monetary aspects. In 1932 he also became an active supporter of a “stamped money plan” aimed at counteracting widespread hoarding. During the New Deal he supported expansionary monetary measures and promoted a revision of the banking system aimed at abolishing fractional reserves (“100% money”). In the meantime he opposed Roosevelt’s labour and industrial policies and, more generally, any intervention by the government on economic activity with the exception of the control on money supply.

Suggested Citation

  • Giovanni Pavanelli, 2003. "The great depression in Irving Fisher's Work," History of Economic Ideas, Fabrizio Serra Editore, Pisa - Roma, vol. 11(1), pages 151-167.
    • Handle: RePEc:hid:journl:v:11:y:2003:1:8:p:151-167
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    Cited by:

    1. Joerg Bibow, 2020. " The General Theory as "Depression Economics"? Financial Instability and Crises in Keynes's Monetary Thought," Economics Working Paper Archive wp_974, Levy Economics Institute.

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