Working Paper

Interest rates, commodity price changes and Gibson's paradox

Abstract: This paper argues that the positive relationship between the level of prices and interest rates noted by Gibson arises, in part, because measured prices indexes, which are comprised primarily of the prices of short-lived consumption goods, and nominal interest rates are both driven in the same direction by changes in the real rate of interest.

Keywords: Interest rates; Prices;

Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Working Papers

Publication Date: 1987

Number: 1983-004