Geanakoplos, John; Karatzas, Ioannis; Shubik, Martin; … - School of Management, Yale University - 2004
The classical Fisher equation asserts that in a nonstochastic economy, the inflation rate must equal the difference … in which the central bank sets the nominal rate of interest. The Fisher equation still holds, but with the rate of … contrast, the classical Fisher equation asserts that inflation should then be zero. In fact, no constant interest rate will …