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dc.contributor.authorHannsgen, Gregen_US
dc.description.abstractMany empirical studies have found that interest rate have a positive effect on the price level. This paper pursues an obvious, but neglected explanation: interest payments are a cost of production that is at least in part passed on to costumers. A model shows that the cost-push effect of inflation, long known as Gibson's paradox, intensifies destabilizing forces and can be involved in the generation of cycles. An empirical investigation finds that the positive association of interest rates with inflation or the log of the price level is present in data from the 1950s to present.en_US
dc.publisherLevy Economics Institute of Bard College Annandale-on-Hudson, NYen_US
dc.relation.ispartofseriesWorking papers // The Levy Economics Institute 410en_US
dc.subject.keywordGibson's Paradoxen_US
dc.subject.keywordMonetary Policy Rulesen_US
dc.subject.keywordNonlinear Dynamicsen_US
dc.titleGibson's paradox, monetary policy, and the emergence of cyclesen_US
dc.typeWorking Paperen_US
Appears in Collections:Working Papers, Levy Economics Institute of Bard College

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