29 Apr '14, 4am

GiffenCoin - Is Bitcoin displaying Giffen behavior?: Giffen goods are those that people consume more as the pr...

Giffen goods are those that people consume more as the price rises, in violation of the law of demand where higher prices mean lower demand. It happens that Giffen goods are really uncommon, to the point that it has been really difficult to prove their existence with little empirical evidence. One common (but disproved) example are the Irish potatoes in the 19th century and -more recently- subsidized rice in China, based with the works of Robert Jensen and Nolan Miller. Over the years there have been some theories and ideas of money displaying Giffen behavior, on a 2011 article by James Kwak, he argued that the effect of increased price of money (in terms of other goods and assets) has on investments will cause investors to shift some of those investments back to cash, so in theory our fictional investor would be consuming more money when the price rises. One basic criteri...

Full article: https://bitcointalk.org/index.php?topic=588384.0

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