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Gibson's Paradox

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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 are correlated to the rate of inflation.

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


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invalidation since 1995 of Gibson's Paradox -- that gold
to around $270 rather than rising toward the $500 level as Gibson's paradox and the model of it constructed by Summers indicates they should have.
to around $270 rather than rising toward the $500 level as Gibson's paradox and the model of it constructed by Barsky and Summers indicates they should have.
 
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