" In 1911, Fisher published The Purchasing Power of Money. In chapter 13 of the first edition and in an appendix in the second section of 1913, he introduced a rule to maintain the stability of the level of prices, known as the "compensated dollar." According to this rule, the legal definition of money is changed. In other words, the weight in gold of the dollar is modified once a month in order to impede the frequency of price changes on a basket of goods. According to Fisher, this plan would offer stability for the purchasing power of money. He sought to find an alternative system to the fixed price of gold under the Gold Standard. He wanted to introduce a dollar fixed in terms of its purchasing power, but variable in terms of its metallic weight. In this paper, we will focus on Fisher's analysis of the stability of money value and his position in the debate on the compensated dollar from 1909 to 1922. We will study the anticipations of Fisher's compensated dollar, the critical reception of Fisher's project and the evolutions it gave rise to, the gold exchange standard and the algebraic evidence. We also examine the debate's connections to the question of whether or not the compensated dollar plan is compatible with the quantity theory of money. We end with the analysis of the gold price elasticity of the net supply of gold, with an explanation of the relationship between the Yellowbacks and the varying price of the gold reserve."
Origins and developments of Irving Fisher's compensated dollar plan
Résumé
en
" In 1911, Fisher published The Purchasing Power of Money. In chapter 13 of the first edition and in an appendix in the second section of 1913, he introduced a rule to maintain the stability of the level of prices, known as the "compensated dollar." According to this rule, the legal definition of money is changed. In other words, the weight in gold of the dollar is modified once a month in order to impede the frequency of price changes on a basket of goods. According to Fisher, this plan would offer stability for the purchasing power of money. He sought to find an alternative system to the fixed price of gold under the Gold Standard. He wanted to introduce a dollar fixed in terms of its purchasing power, but variable in terms of its metallic weight. In this paper, we will focus on Fisher's analysis of the stability of money value and his position in the debate on the compensated dollar from 1909 to 1922. We will study the anticipations of Fisher's compensated dollar, the critical reception of Fisher's project and the evolutions it gave rise to, the gold exchange standard and the algebraic evidence. We also examine the debate's connections to the question of whether or not the compensated dollar plan is compatible with the quantity theory of money. We end with the analysis of the gold price elasticity of the net supply of gold, with an explanation of the relationship between the Yellowbacks and the varying price of the gold reserve."
Auteur(s)
Rebeca Gomez Betancourt1
, Jérôme de Boyer Des Roches2
1
TRIANGLE -
Triangle : action, discours, pensée politique et économique
( 145357 )
- 15, parvis René-Descartes - BP 7000 69342 LYON CEDEX 07
- France
École normale supérieure de Lyon ( 6818 )
;
Université Lumière - Lyon 2 ( 33804 )
;
Sciences Po Lyon - Institut d'études politiques de Lyon ( 59112 )
;
Université de Lyon ( 301088 )
;
Université Jean Monnet - Saint-Étienne ( 300284 )
;
Centre National de la Recherche Scientifique UMR5206 ( 441569 )
2
LEDa -
Laboratoire d'Economie de Dauphine
( 163511 )
- "Place du Maréchal de Lattre de Tassigny 75775 PARIS Cedex 16 "
- France
Université Paris Dauphine-PSL ( 300302 )
;
Université Paris Sciences et Lettres ( 564132 )
Audience
Non spécifiée
Date de publication
2013-02-13
Page/Identifiant
261-283
Comité de lecture
Oui
Vulgarisation
Non
Langue du document
Anglais
Nom de la revue
European Journal of the History of Economic Thought
(ISSN : 0967-2567, ISSN électronique : 1469-5936)
Publié par Taylor & Francis (Routledge)
Revue non référencée dans Sherpa-Romeo
B - History of Economic Thought, Methodology, and Heterodox Approaches/B.B1 - History of Economic Thought through 1925
E - Macroeconomics and Monetary Economics/E.E4 - Money and Interest Rates
E - Macroeconomics and Monetary Economics/E.E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit
N - Economic History/N.N1 - Macroeconomics and Monetary Economics • Industrial Structure • Growth • Fluctuations/N.N1.N11 - U.S. • Canada: Pre-1913
E - Macroeconomics and Monetary Economics/E.E4 - Money and Interest Rates/E.E4.E40 - General
E - Macroeconomics and Monetary Economics/E.E3 - Prices, Business Fluctuations, and Cycles/E.E3.E31 - Price Level • Inflation • Deflation
B - History of Economic Thought, Methodology, and Heterodox Approaches/B.B1 - History of Economic Thought through 1925/B.B1.B13 - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Wicksellian)
B - History of Economic Thought, Methodology, and Heterodox Approaches/B.B2 - History of Economic Thought since 1925/B.B2.B22 - Macroeconomics
B - History of Economic Thought, Methodology, and Heterodox Approaches/B.B3 - History of Economic Thought: Individuals/B.B3.B31 - Individuals
Domaine(s)
Sciences de l'Homme et Société/Economies et finances
Rebeca Gomez Betancourt, Jérôme de Boyer Des Roches. Origins and developments of Irving Fisher's compensated dollar plan. European Journal of the History of Economic Thought, 2013, 20 (2), pp.261-283. ⟨10.1080/09672567.2012.758755⟩. ⟨halshs-00789938⟩