Gibson’s Paradox
NBER WORKING PAPER SERIES
Because gold is a durable asset, its relative price is systematically affected by fluctuations in the real productivity of capital, which also determine real interest rates.
GIBSON'S PARAOOX ANO THE GOLO STANOARD
Robert B. Barsky Lawrence H. Summers
1985 research paper: “Gibson's Paradox and the Gold Standard”
Summers Barsky
Working Paper No. 1680
NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 August 1985
Expected Return Matrix
Gold returns are higher when capital productivity is lower
We are grateful to Olivier Blanchard, Stanley Fischer, N. Gregory Mankiw, Franco Modigliani, Julio Rotemberg, and participants in seminars at Columbia, Harvard, Maryland. Michigan. MIT, UCLA, and the Federal Reserve for extremely helpful comments. The research reported here ;s part of the NBER's research programs in Economic Fluctuations and Financial Markets and Monetary Economics. Any opinions expressed are those of the authors and not those of the National Bureau of Economic Research.
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