Also found in: Wikipedia.
An observation that interest rates are correlated with wholesale prices rather than the inflation rate. Gibson's Paradox was first discussed by John Maynard Keynes in 1930; at the time, the idea was controversial, as most economists believed that interest rates correlated with changes to prices rather than the prices themselves. It is important to note that Gibson's paradox only applied when money was on the gold standard. See also: Keynesian economics.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved