Phillip David Cagan (April 30, 1927 – June 15, 2012) was an American scholar and author. He was Professor of Economics Emeritus at
Columbia University.
During his time at Columbia, Cagan was also associated with the
American Enterprise Institute (AEI) in Washington, D.C., writing on public policy issues.
Cagan's work focused on
monetary policy and the control of
inflation. Cagan has published over 100 books, journal articles, reviews, reports, and pamphlets on these and other topics in
macroeconomics. He is perhaps best known for Determinants and Effects of Changes in the Stock of Money, 1875–1960, a work that sought to identify the "causal relationships between changes in money, prices and output."[3] The book, part of the NBER series that contained
Milton Friedman and
Anna J. Schwartz's Monetary History of the United States, 1867–1960, was praised for its "careful empirical work" and called "the most complete study in the area."[4]
Cagan's most important contribution to economics, however, is the article included in
Milton Friedman's edited volume Studies in the Quantity Theory of Money (1956), entitled "The Monetary Dynamics of Hyperinflation,"[5] a work that became an "instant classic" in the field.[2]
The article, which contained "extensive manipulation of
differential equations and an ingenious use of exponentially weighted averages",[6] analyzed seven
hyperinflations and found that "the parameters of money
demand functions estimated during
hyperinflation generally satisfy the condition of dynamic
stability that precludes the
inflation from being self-generating, or displaying period-to-period oscillations."[7]
After its publication, Cagan's article generated a significant body of work, as a number of leading
macroeconomists either reexamined or extended
Cagan's model, most notably "Barro (1970), Sargent and Wallace (1973), Frenkel (1975, 1976a, 1976b, 1977, 1979), Sargent (1977), Abel et al. (1979), Salemi (1979), and Salemi and Sargent (1979)."[8] In addition, monetary economists today often refer to a "Cagan demand function" when modeling the real value of money.[9][10]
Because of the impact that this groundbreaking work had upon the economics profession, Cagan was elected Fellow of the
Econometric Society (the most prestigious society in the field),[11] and was mentioned as a possible candidate for the
Nobel Prize in Economics.[12] However, following his death in 2012, he is no longer eligible for a Nobel Prize.
Selected bibliography
Cagan, Phillip (1956). "The Monetary Dynamics of Hyperinflation". In
Friedman, Milton (ed.). Studies in the Quantity Theory of Money. Chicago: University of Chicago Press.
ISBN0-226-26406-8..
______, "Why Do We Use Money in Open Market Operations?" The Journal of Political Economy, Vol. 66, No. 1 (Feb., 1958), pp. 34–46.
[1]
______, "The Demand for Currency Relative to the Total Money Supply," The Journal of Political Economy, Vol. 66, No. 4 (Aug., 1958), pp. 303–328,
[2]
______, Determinants and Effects of Changes in the Stock of Money, 1875–1960, New York: Columbia University Press (1965).
[3]
______, "The Non-Neutrality of Money In the Long Run: A Discussion of the Critical Assumptions and Some Evidence," Journal of Money, Credit and Banking, Vol. 1, No. 2, Conference on Money and Economic Growth (May, 1969), pp. 207–227.
[4]
______, Persistent Inflation: Historical and Policy Essays, New York: Columbia University Press (1979).
[5]
______, "Reflections on Rational Expectations," Journal of Money, Credit and Banking, Vol. 12, No. 4, Part 2: Rational Expectations (Nov., 1980), pp. 826–832.
[6]
______, "The Choice Among Monetary Aggregates as Targets and Guides for Monetary Policy," Journal of Money, Credit and Banking, Vol. 14, No. 4, Part 2: The Conduct of U.S. Monetary Policy (Nov., 1982), pp. 661–686.
[7]
______, "Does Endogeneity of the Money Supply Disprove Monetary Effects on Economic Activity?" Journal of Macroeconomics, Vol. 15, (Summer 1993).
Phillip Cagan and William G. Dewald, "The Conduct of U.S. Monetary Policy: Introduction," Journal of Money, Credit and Banking, Vol. 14, No. 4, Part 2: The Conduct of U.S. Monetary Policy (Nov., 1982), pp. 565–574.
[8]
Phillip Cagan and
Arthur Gandolfi, "The Lag in Monetary Policy as Implied by the Time Pattern of Monetary Effects on Interest Rates," The American Economic Review, Vol. 59, No. 2, Papers and Proceedings of the Eighty-first Annual Meeting of the American Economic Association (May, 1969), pp. 277–284
[9]
Phillip Cagan and Anna J. Schwartz, "Has the Growth of Money Substitutes Hindered Monetary Policy?" Journal of Money, Credit and Banking, Vol. 7, No. 2 (May, 1975), pp. 137–159.
[10]
______, "The National Bank Note Puzzle Reinterpreted," Journal of Money, Credit and Banking, Vol. 23, No. 3, Part 1 (Aug., 1991), pp. 293–307.
[11]
^Angell, James W.; Friedman, Milton; Cagan, Phillip; Klein, John J.; Lerner, Eugene M.; Selden, Richard T. (1957). "Review: Studies in the Quantity Theory of Money". Journal of the American Statistical Association. 52 (280). American Statistical Association: 599–602.
doi:
10.2307/2281729.
JSTOR2281729.
^Khan, Mohsin S. (1980). "Dynamic Stability in the Cagan Model of Hyperinflation". International Economic Review. 21 (3). Blackwell Publishing: 577–582.
doi:
10.2307/2526353.
JSTOR2526353.
^Taylor, Mark P. (1991). "The Hyperinflation Model of Money Demand Revisited". Journal of Money, Credit and Banking. 23 (3). Blackwell Publishing: 327–351.
doi:
10.2307/1992749.
JSTOR1992749.
Snowdon, Brian;
Vane, Howard R., eds. (2002). "Phillip Cagan". An Encyclopedia of Macroeconomics. Cheltenham, UK: Edward Elgar Publishing. p. 105..
Engsted, Tom (1993). "Cointegration and Cagan's Model of Hyperinflation under Rational Expectations". Journal of Money, Credit and Banking. 25 (3). Blackwell Publishing: 350–360.
doi:
10.2307/2077767.
JSTOR2077767.
Frenkel, Jacob A. (1977). "The Forward Exchange Rate, Expectations, and the Demand for Money: The German Hyperinflation". International Economic Review. 67 (4): 653–670.
ISSN0002-8282.
JSTOR1813397.
Sargent, Thomas J. (1977). "The Demand for Money During Hyperinflation under Rational Expectations: I". International Economic Review. 18 (1). Blackwell Publishing: 59–82.
doi:
10.2307/2525769.
JSTOR2525769.