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Economic Quarterly

Fall 1997

Fisher and Wicksell on the Quantity Theory

Thomas M. Humphrey

Their differing interpretations of the quantity theory notwithstanding, both Irving Fisher and Knut Wicksell used the theory to show that the monetary authority can deliver nominal determinacy and stabilize the price level. The authority does so by adjusting its direct operating instrument in response to price level deviations from target. Both economists contended that the stock of monetary purchasing power is the crucial intermediate variable through which instrument adjustment influences prices.

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