[2] After graduate school, Cagan joined the National Bureau of Economic Research (NBER) in New York City where he worked for two years.
During his time at Columbia, Cagan was also associated with the American Enterprise Institute (AEI) in Washington, D.C., writing on public policy issues.
"[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.