Journal Article

A simple model of Irving Fisher's price-level stabilization

Abstract: Fishers advice to the policymakers: Adjust the money stock to correct price-level deviations from target. He neglected to say whether money should respond (1) to the gap between actual and target prices, (2) to the gaps rate of change, (3) to the gaps cumulative value over time, or (4) to some combination of these. While all four versions of Fishers rule deliver price stability in the model presented here, the first does so more promptly and smoothly than the others and outperforms a constant money-stock rule as well.

Keywords: Prices;

Bibliographic Information

Provider: Federal Reserve Bank of Richmond

Part of Series: Economic Review

Publication Date: 1992

Volume: 78

Issue: Nov

Pages: 12-18