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Undergraduate Economic Review

Abstract

Irving Fisher’s 1932 Booms and Depressions presents a fully specified, nine-pronged model of financial crises that has been widely forgotten by modern macroeconomists. This article builds on the renewed interest in Fisher’s Debt-Deflation Theory to explore its pertinence to the Great Recession. By parsing through macroeconomic data from the 2000s, it finds evidence of debt-deflation spiraling and of the nine Fisherian “main factors” co-varying as the author had predicted during the 2008-2009 financial crisis. The article concludes in assessing the uses of Fisher’s work in current macroeconomics and in arguing for a greater consideration of its insights.

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