The existing literature on the stabilizing properties of interest-rate feedback rules has stressed the perils of linking interest rates to forecasts of future inflation. Such rules have been found to give rise to aggregate fluctuations due to self-fulfilling expectations. In response to this...

The Gibson paradox,long observed by economists and named by John Maynard Keynes (1936),is a positive relationship between the interest rate and the price level. This paper explains the relationship by means of interest-rate, cost-push inflation.In the mode,spending is driven in part by changes...

The existing literature on the stabilizing properties of interest-rate feedback rules has stressed the perils of linking interest rates to forecasts of future inflation. Such rules have been found to give rise to aggregate fluctuations due to self-fulfilling expectations. In response to this...