Hostname: page-component-78c5997874-fbnjt Total loading time: 0 Render date: 2024-11-15T09:32:21.247Z Has data issue: false hasContentIssue false
  • English
  • Français

Irving Fisher, Inflation, and the Nominal Rate of Interest

Published online by Cambridge University Press:  19 October 2009

G. Marc Choate  and
Stephen H. Archer
Get access Rights & Permissions [Opens in a new window]

Extract

The purpose of this paper is to present a more meaningful interpretation of the empirical finding of a distributed lag relationship between the nominal (market) rate of interest and the rate of inflation than that offered by Irving Fisher [8] and subsequent writers (see e.g., [2], [9], [10], [11], [15], [17]). In Part II we identify a paradox between Fisher's theory and his empirical results and examine previous explanations for the paradox. In III and IV, we offer what appears to be a more satisfactory resolution of the paradox and subject it to empirical test.

Type
IX. Capital Market Theory
Information
Journal of Financial and Quantitative Analysis , Volume 10 , Issue 4 , November 1975 , pp. 675 - 685
Copyright
Copyright © School of Business Administration, University of Washington 1975

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

[1]Almon, S. “The Distributed Lag between Capital Appropriations and Expenditures.” Econometrica, vol. 33, no. 1 (January 1965).CrossRefGoogle Scholar
[2]Anderson, Leonall C., and Carlson, Keith M.. “A Monetarist Model for Economic Stabilization.” Federal Reserve Bank of St. Louis Review (April 1970), pp. 7–25.Google Scholar
[3]Box, C.E.P., and Jenkins, G.J.. “Some Statistical Aspects of Adaptive Optimization and Control.” Journal of the Royal Statistical Society—Series B, vol. 24 (1962), pp. 297–331.Google Scholar
[4]Branson, William H., and Klevorick, Alvin K.. “Money Illusion and the Aggregate Consumption” American Economic Review, vol. 59, no. 5 (December 1969), pp. 832–849.Google Scholar
[5]Cagan, Phillip. “Monetary Dynamics of Hyper-Inflation.” In Studies in the Quality Theory of Money, edited by Friedman, Milton. Chicago: University of Chicago Press (1956).Google Scholar
[6]Dhrymes, Phoebus J.Distributed Lags: Problems of Estimation and Formulation. San Francisco: Holden-Day, Inc. (1971).Google Scholar
[7]Federal Reserve Bulletin. Board of Governors, Federal Reserve System, December 1970 and subsequent issues.Google Scholar
[8]Fisher, Irving. The Theory of Interest. New York: The Macraillan Company (1930).Google Scholar
[9]Gibson, William E. “Price Expectation Effects on Interest Rates.” Journal of Finance vol. 25, no. 1 (March 1970), pp. 19–34.Google Scholar
[10]Gordon, Robert J. “The Recent Acceleration of Inflation and Its Lessons for the Future.” Brookings Papers on Economic Activity 1: 1070, pp. 8–41Google Scholar
[11]Gordon, Robert J. “Inflation and Recession in Recovery.” Brookings Papers on Economic Activity 1: 1971, pp. 105–158.Google Scholar
[12]Griliches, Zvi. “Distributed Lags: A Survey.” Econometrica, vol. 34, no. 1 (1966).Google Scholar
[13]Nerlove, M., and Wage, S.. “On the Optimality of Adaptive Forecasting” Management Science, vol. 10, no. 2 (January 1964), pp. 207–223.CrossRefGoogle Scholar
[14]Rao, , Potluri, , and Miller, Roger L.. Applied Econometrics. Belmont: Wadsworth Publishing Company (1971).Google Scholar
[15]Sargent, Thomas. “Commodity Price Expectations and the Interest Rate” Quarterly Journal of Economics, vol. 83, no. 1 (February 1969), pp. 127–140.CrossRefGoogle Scholar
[16]Survey of Current Business. Department of Commerce, various issues.Google Scholar
[17]Yohe, William P., and Karnosky, Denis S.. “Interest Rates and Price Level Changes, 1952–1969.” Federal Reserve Bank of St. Louis Review (December 1969), pp. 18–38.Google Scholar