Price Expectations and Interest Rates.

The article focuses on growth industries in monetary economics, such as the influence of price expectations on real money. Fisher and Gibson's contributions are evaluated and their research indicates that their partial-equilibrium analyses results in opposed conclusions. The next section offers an equilibrium approach in which the real rate stays unchanged or drops when inflation is expected. This model is combined with the general-equilibrium model. Also provided are the conditions under which expectations of inflation result in the increase in the interest rates.