Investopedia

Continue to Site »

Gibson's Paradox

Filed Under » ,
Dictionary Says

Definition of 'Gibson's Paradox'

An economic observation made by J. M. Keynes during the period of the gold standard that there is a correlation between interest rates and the general price level. Keynes' finding, which he discusses in "A Treatise on Money" (1930), is a paradox because it is contrary to the view generally held by economists at the time, which was that interest rates were correlated to the rate of inflation.
Investopedia Says

Investopedia explains 'Gibson's Paradox'

In Keynes' research, interest rates were highly correlated to wholesale prices but had little correlation to the rate of inflation. In this paradox, interest rate movements are connected to the level of prices, not the rate of change in prices.

Articles Of Interest

  1.

    The Consumer Price Index: A Friend To Investors

    As a measure of inflation, this index can help you make key financial decisions.

  2. Interest Rates And Your Bond Investments

    By understanding the factors that influence interest rates, you can learn to anticipate their movement and profit from it.

  3. What Is Money?

    It's a part of everyone's life, and we all want it, but do you know how it gains value and how it is created?

  4. Forces Behind Interest Rates

    Get a deeper understanding of the importance of interest rates and what makes them change.

  5. Economics Basics

    Learn economics principles such as the relationship of supply and demand, elasticity, utility, and more!

  6. Why The Consumer Price Index Is Controversial

    Find out why economists are torn about how to calculate inflation.

  7. Predict Inflation With The Producer Price Index

    Find out how the PPI can be used to gauge the overall health of the economy.

  8. Leading Economic Indicators Predict Market Trends

    Leading indicators help investors to predict and react to where the market is headed.

  9. Austerity: When The Government Tightens Its Belt

    When a government tightens its belt in tough economic times the entire nation feels the squeeze.

  10. Will Quantitative Easing Be Japan's Savior?

    The quantitative easing program, recently announced by the new governor of the Bank of Japan, Haruhiko Kuroda, is for a cash infusion of $1.4 trillion by the end of 2014. Will it help the Japanese ...
comments powered by Disqus
Marketplace
Hot Definitions

  1. Glocalization

    A combination of the words "globalization" and "localization" used to describe a product or service that is developed and distributed globally, but is also fashioned to accommodate the user or consumer in a local market.

  2. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  3. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  4. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  5. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.

  6. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.
Trading Center
Array ( )
taggroups(for debug only):
Array ( [0] => Economy And Economics [1] => Economics )