Gibson paradox revisited – liquidity chain effect

Gibson paradox remains a puzzle in the discipline of economics. Previous studies attempted to resolve the paradox looking separately at the gold standard, changing monetary regimes, inflation expectations, risk and uncertainty. Our study shows Gibson paradox holds for the Netherlands 1800-2012 with real long interest rates and prices diverging after 2008. This paper offers empirical evidence (nonlinear cointegration) on the integrity of the Gibson paradox. Single factor cannot explain the paradox itself (because of its nonlinear nature) as previous studies attempted. Empirical link between lon... Mehr ...