Irving Fisher – The

Economist
Presented by
Rohan Jhatakia
Shraddha Goje
Hetal Mehta
 Who is Irving Fisher ?
• Fisher was a mathematical economist. He
was born in Saugerties, New York, on
February 27, 1867.
• The young Irving always had the
mathematical ability and a flair for invention.
• His father was a teacher and congregational
minister, who raised his son to believe he
must be a useful member of society.
• He received his doctoral degree in
mathematics at Yale in 1891. From 1892 until
1895 he taught mathematics at Yale; in 1895
he joined the faculty of political economy,
where he remained until his retirement as
professor emeritus in 1935.
 Irving Fisher – The Great
Economist
• Several concepts are named after
him, including the Fisher
equation, Fisher hypothesis and
Fisher separation theorem.

• His son, Irving Norton Fisher,

compiled a 4,300-page
bibliography of his known
writings, A Bibliography of the
Writings of Irving Fisher (1961).

• He also wrote a creditable

biography, My Father, Irving
Fisher (1956), that covers the
essentials of his father's career.
Theories of Irving Fisher
 The inflation and interest
rate: the fisher effect
Interest rate is an important
macroeconomic variable as it
determines savings and investment in
the economy

Nominal interest rate and real interest

rate

The rate of increase in purchasing

power of money deposits over time
depends on the nominal interest rate
 Real interest rate
• Real interest rate is obtained from
nominal IR by adjusting for inflation
rate
• Real rate of interest = Nominal rate
of interest – Inflation rate
• Also called as fisher equation
 Fisher equation
• An important principle of classical theory
Money is neutral that it does not affect the
real variables. Changes in money supply
determine only the changes in the price
level or rate of inflation in the economy
• Real rate of interest + Nominal rate of
interest = Inflation rate
•  
• Nominal IR as the sum of real int.
rate and inflation rate is quite useful
as entirely different forces determine
the real int. rate and the inflation
• real interest rate is determined by
savings and investment,
• rate of inflation is determined by rate
of growth of money supply
 Fisher effect
• An important macroeconomic Issue
• Adjustment of nominal interest rate
to changes in inflation of the year is
called the
FISHER EFFECT
• The higher the rate of inflation the
higher the nominal interest rate
Money and Price Level
Theory