Phillip David Cagan (April 30, 1927 – June 15, 2012) was an American scholar and author. He was Professor of Economics Emeritus at
Columbia University
Columbia University (also known as Columbia, and officially as Columbia University in the City of New York) is a private research university in New York City. Established in 1754 as King's College on the grounds of Trinity Church in Manhatt ...
.
Biography
Born in
Seattle
Seattle ( ) is a seaport city on the West Coast of the United States. It is the seat of King County, Washington. With a 2020 population of 737,015, it is the largest city in both the state of Washington and the Pacific Northwest regio ...
,
Washington
Washington commonly refers to:
* Washington (state), United States
* Washington, D.C., the capital of the United States
** A metonym for the federal government of the United States
** Washington metropolitan area, the metropolitan area centered o ...
, Cagan and his family moved to
Southern California
Southern California (commonly shortened to SoCal) is a geographic and Cultural area, cultural region that generally comprises the southern portion of the U.S. state of California. It includes the Los Angeles metropolitan area, the second most po ...
shortly thereafter. Cagan joined the
U.S. Navy
The United States Navy (USN) is the maritime service branch of the United States Armed Forces and one of the eight uniformed services of the United States. It is the largest and most powerful navy in the world, with the estimated tonnage o ...
at age 17 and fought in
World War II
World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposin ...
. After the war, Cagan decided to go to college, and earned his
B.A.
Bachelor of arts (BA or AB; from the Latin ', ', or ') is a bachelor's degree awarded for an undergraduate program in the arts, or, in some cases, other disciplines. A Bachelor of Arts degree course is generally completed in three or four years ...
from
UCLA
The University of California, Los Angeles (UCLA) is a public land-grant research university in Los Angeles, California. UCLA's academic roots were established in 1881 as a teachers college then known as the southern branch of the California St ...
in 1948. Cagan received his
M.A.
A Master of Arts ( la, Magister Artium or ''Artium Magister''; abbreviated MA, M.A., AM, or A.M.) is the holder of a master's degree awarded by universities in many countries. The degree is usually contrasted with that of Master of Science. Tho ...
in 1951, and his
Ph.D.
A Doctor of Philosophy (PhD, Ph.D., or DPhil; Latin: or ') is the most common degree at the highest academic level awarded following a course of study. PhDs are awarded for programs across the whole breadth of academic fields. Because it is a ...
in
Economics
Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services.
Economics focuses on the behaviour and intera ...
in 1954 from the
University of Chicago
The University of Chicago (UChicago, Chicago, U of C, or UChi) is a private research university in Chicago, Illinois. Its main campus is located in Chicago's Hyde Park neighborhood. The University of Chicago is consistently ranked among the b ...
.
After graduate school, Cagan joined the
National Bureau of Economic Research
The National Bureau of Economic Research (NBER) is an American private nonprofit research organization "committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic c ...
(NBER) in
New York City
New York, often called New York City or NYC, is the List of United States cities by population, most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the L ...
where he worked for two years. Then Cagan re-entered academia, teaching at the University of Chicago for three years, and at
Brown University
Brown University is a private research university in Providence, Rhode Island. Brown is the seventh-oldest institution of higher education in the United States, founded in 1764 as the College in the English Colony of Rhode Island and Providenc ...
for seven years. In 1966 Cagan was hired by
Columbia University
Columbia University (also known as Columbia, and officially as Columbia University in the City of New York) is a private research university in New York City. Established in 1754 as King's College on the grounds of Trinity Church in Manhatt ...
, where he taught economics for nearly thirty years — save for fifteen months spent in
Washington, D.C.
)
, image_skyline =
, image_caption = Clockwise from top left: the Washington Monument and Lincoln Memorial on the National Mall, United States Capitol, Logan Circle, Jefferson Memorial, White House, Adams Morgan, ...
, when he was on the staff of the
Council of Economic Advisors
The Council of Economic Advisers (CEA) is a United States agency within the Executive Office of the President established in 1946, which advises the President of the United States on economic policy. The CEA provides much of the empirical resea ...
(CEA).
During his time at Columbia, Cagan was also associated with the
American Enterprise Institute
The American Enterprise Institute for Public Policy Research, known simply as the American Enterprise Institute (AEI), is a center-right Washington, D.C.–based think tank that researches government, politics, economics, and social welfare. ...
(AEI) in Washington, D.C., writing on public policy issues.
Cagan lived in
Palo Alto
Palo Alto (; Spanish for "tall stick") is a charter city in the northwestern corner of Santa Clara County, California, United States, in the San Francisco Bay Area, named after a coastal redwood tree known as El Palo Alto.
The city was estab ...
,
California
California is a U.S. state, state in the Western United States, located along the West Coast of the United States, Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the List of states and territori ...
during his last years.
Contributions to economic science
Cagan's work focused on
monetary policy
Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often a ...
and the control of
inflation
In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...
. Cagan has published over 100 books, journal articles, reviews, reports, and pamphlets on these and other topics in
macroeconomics
Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole.
For example, using interest rates, taxes, and ...
. 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."
The book, part of the NBER series that contained
Milton Friedman
Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...
and
Anna J. Schwartz
Anna Jacobson Schwartz (pronounced ; November 11, 1915 – June 21, 2012) was an American economist who worked at the National Bureau of Economic Research in New York City and a writer for ''The New York Times''. Paul Krugman has said that Schwar ...
'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."
Cagan's most important contribution to economics, however, is the article included in
Milton Friedman
Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...
's edited volume ''Studies in the Quantity Theory of Money'' (1956), entitled "The Monetary Dynamics of Hyperinflation,"
a work that became an "instant classic" in the field.
The article, which contained "extensive manipulation of
differential equation
In mathematics, a differential equation is an equation that relates one or more unknown functions and their derivatives. In applications, the functions generally represent physical quantities, the derivatives represent their rates of change, an ...
s and an ingenious use of exponentially weighted averages",
analyzed seven
hyperinflations and found that "the parameters of money
demand function
In economics, a demand curve is a graph depicting the relationship between the price of a certain commodity (the ''y''-axis) and the quantity of that commodity that is demanded at that price (the ''x''-axis). Demand curves can be used either for t ...
s estimated during
hyperinflation
In economics, hyperinflation is a very high and typically accelerating inflation. It quickly erodes the real value of the local currency, as the prices of all goods increase. This causes people to minimize their holdings in that currency as t ...
generally satisfy the condition of dynamic
stability
Stability may refer to:
Mathematics
*Stability theory, the study of the stability of solutions to differential equations and dynamical systems
**Asymptotic stability
**Linear stability
**Lyapunov stability
**Orbital stability
**Structural stabilit ...
that precludes the
inflation
In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...
from being self-generating, or displaying period-to-period oscillations."
After its publication, Cagan's article generated a significant body of work, as a number of leading
macroeconomist
Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole.
For example, using interest rates, taxes, and ...
s 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)."
In addition, monetary economists today often refer to a "Cagan demand function" when modeling the real value of money.
Because of the impact that this groundbreaking work had upon the economics profession, Cagan was elected Fellow of the
Econometric Society
The Econometric Society is an international society of academic economists interested in applying statistical tools to their field. It is an independent organization with no connections to societies of professional mathematicians or statisticians. ...
(the most prestigious society in the field),
and was mentioned as a possible candidate for the
Nobel Prize in Economics
The Nobel Memorial Prize in Economic Sciences, officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel ( sv, Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne), is an economics award administered ...
.
However, following his death in 2012, he is no longer eligible for a Nobel Prize.
Selected bibliography
* .
* ______, "Why Do We Use Money in Open Market Operations?" ''The Journal of Political Economy'', Vol. 66, No. 1 (Feb., 1958), pp. 34–46
* ______, "The Demand for Currency Relative to the Total Money Supply," ''The Journal of Political Economy'', Vol. 66, No. 4 (Aug., 1958), pp. 303–328
* ______, ''Determinants and Effects of Changes in the Stock of Money, 1875–1960'', New York: Columbia University Press (1965
* ______, "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
* ______, ''Persistent Inflation: Historical and Policy Essays'', New York: Columbia University Press (1979
* ______, "Reflections on Rational Expectations," ''Journal of Money, Credit and Banking'', Vol. 12, No. 4, Part 2: Rational Expectations (Nov., 1980), pp. 826–832
* ______, "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
* ______, "Does Endogeneity of the Money Supply Disprove Monetary Effects on Economic Activity?" ''
Journal of Macroeconomics
The ''Journal of Macroeconomics'' is a peer-reviewed academic journal established in 1979 that covers research on a broad range of issues in monetary economics and macroeconomics, including economic growth, fluctuations, fiscal policy, and macroec ...
'', 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
* 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. 277–28
* 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
* ______, "The National Bank Note Puzzle Reinterpreted," ''Journal of Money, Credit and Banking'', Vol. 23, No. 3, Part 1 (Aug., 1991), pp. 293–307
See also
*
Monetarism
Monetarism is a school of thought in monetary economics that emphasizes the role of governments in controlling the amount of money in circulation. Monetarist theory asserts that variations in the money supply have major influences on measures ...
Notes
Further reading
*
* .
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External links
Faculty Emeriti Department of Economics, Columbia University
New School's CEPA Website
New School's CEPA Website
San José State University Department of Economics
{{DEFAULTSORT:Cagan, Phillip
Macroeconomists
Monetary economists
Monetarists
Fellows of the Econometric Society
Columbia University faculty
Brown University faculty
University of Chicago faculty
University of Chicago alumni
University of California, Los Angeles alumni
Writers from Seattle
1927 births
2012 deaths
Economists from Washington (state)