The missing equation in E.W. Kemmerer (1903) and I. Fisher (1892, 1911)

In his 1903 thesis - “Money and credit instruments in their relation to general prices” - published in 1907, E.W. Kemmerer argued that the market prices of goods cannot be determined by the equations of demand and supply of goods without introducing the “missing” equilibrium equation of monetary demand and monetary supply. Taking into account Patinkin’s (1965) distinction between money and accounting prices, we discuss Kemmerer’s theory in the light of Fisher’s (1892) analysis of the determination of the market prices of goods in his article - “Mathematical Investigations in the Theory and Value of Prices”. Then we consider Fisher (1911) when he introduced the “missing” transaction equation in The Purchasing Power of Money. Thereafter, we consider the hidden equation that enables Fisher to conceive his compensated dollar plan and show that he used two distinct equations to determine one price. In the hole, the theoretical basis of Fisher’s plan is not compatible with his quantity theory.