1. Monetary Theory and Policy:
* The Quantity Theory of Money: Fisher is most famous for his rigorous development of the Quantity Theory of Money, which states that the price level is directly proportional to the money supply. His work on this theory, including the "Fisher Equation" (MV=PT), remains a cornerstone of macroeconomics.
* Deflation and Debt: He was a strong advocate for stable prices and warned of the dangers of deflation, arguing that it could lead to economic instability and a spiral of falling prices and output. He believed that deflation could worsen debt burdens and lead to a deflationary spiral.
* Interest Rates and Inflation: He formulated the famous "Fisher Effect" which proposes that nominal interest rates adjust to expected inflation. This means that higher inflation will lead to higher nominal interest rates to compensate for the erosion of purchasing power.
2. Econometrics and Statistics:
* Index Numbers: Fisher made important contributions to the development of index numbers, which are used to measure changes in prices, production, and other economic variables over time. He developed the "Fisher Ideal Index" which is widely used today.
3. Other Areas:
* Utility Theory: He developed important ideas about utility and consumer behavior, including the "Fisherian Model of Intertemporal Choice" which explains how people make decisions about consumption and saving over time.
* Social Responsibility: Fisher was an active advocate for social causes, particularly in the areas of eugenics and public health. He believed that economics could be used to improve society.
Key Publications:
* The Purchasing Power of Money (1911): This book provided a detailed and rigorous analysis of the Quantity Theory of Money.
* The Theory of Interest (1930): This book laid out his theory of interest and its relationship to inflation and other economic factors.
Impact and Legacy:
Irving Fisher's work has had a profound impact on the field of economics. His contributions to monetary theory and econometrics are still relevant today. He is considered one of the most influential economists of the 20th century. His work continues to inform our understanding of how money and credit affect the economy.