We argue that real uncertainty itself causes long-run nominal inflation. Consider an infinite horizon cash … the central bank fixes the nominal rate of interest. We show that the equilibrium long-run rate of inflation is strictly … an explicit formula for the long-run rate of inflation, based on the famous Fisher equation. The Fisher equation says the …

for consumption in each period before knowing their income, then there is no inflation. However, there is an inflationary … inflation. …

The classical Fisher equation asserts that in a nonstochastic economy, the inflation rate must equal the difference … inflation replaced by the harmonic mean of the growth rate of money. Except for logarithmic utility, we show that on almost … every path the long-run rate of inflation is strictly higher than it would be in the nonstochastic world obtained by …

We prove the existence of stationary monetary equilibrium with inflation in a “Bewley” model with constant aggregate …. We also find that, in the presence of real micro uncertainty about individual endowments, the rate of inflation is higher … are shown to generate additional inflation. …

factor, and if agents must bid for consumption in each period before knowing their income, then there is no inflation …, may not be sufficient to control inflation. …