I’ve posted an answer key for Exam 3, yesterday’s lecture notes, and a new assignment (due next week – 4/22, 23) on Chapter 7.
Also, I’ve posted an interesting article from an Economist from February of this year, on Irving Fisher. While it has little to do with what we’ve learned of Fisher (i.e., the Fisher effect), it certainly throws a new light on an old economist. And given that we are spending all this time learning about Keynesian economics, it doesn’t hurt to learn something about his lesser-known contemporary. An excerpt:
As parallels to the 1930s multiply, Fisher is relevant again. As it was then, the United States is now awash in debt. No matter that it is mostly “inside” or “internal” debt—owed by Americans to other Americans. As the underlying collateral declines in value and incomes shrink, the real burden of debt rises. Debts go bad, weakening banks, forcing asset sales and driving prices down further. Fisher showed how such a spiral could turn mere busts into depressions. In 1933 he wrote:
Over investment and over speculation are often important; but they would have far less serious results were they not conducted with borrowed money. The very effort of individuals to lessen their burden of debts increases it, because of the mass effect of the stampede to liquidate…the more debtors pay, the more they owe. The more the economic boat tips, the more it tends to tip. [link]