; ; ; "ActiveFedora::Aggregation::ListSource" . a , ; "Temporary Price Changes and the Real Effects of Monetary Policy"; ; "batchuser@example.com"; "Kehoe, Patrick J.", "Midrigan, Virgiliu"; "Federal Reserve Bank of Minneapolis"; "E50 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General", "E58 - Central Banks and Their Policies", "E12 - General Aggregative Models: Keynes; Keynesian; Post-Keynesian"; "In the data, a large fraction of price changes are temporary. We provide a simple menu cost model which explicitly includes a motive for temporary price changes. We show that this simple model can account for the main regularities concerning temporary and permanent price changes. We use the model as a benchmark to evaluate existing shortcuts that do not explicitly model temporary price changes. One shortcut is to take the temporary changes out of the data and fit a simple Calvo model to it. If we do so prices change only every 50 weeks and the Calvo model overestimates the real effects of monetary shocks by almost 70%. A second shortcut is to leave the temporary changes in the data. If we do so prices change every 3 weeks and the Calvo model produces only 1/9 of the real effects of money as in our benchmark. We show that a simple Calvo model can generate the same real effects as our benchmark model if we set parameters so that prices change every 17 weeks. "^^; "2008-05-01"; "2019-06-24T19:23:37.104258348+00:00"^^; "https://doi.org/10.21034/wp.661"; ; "https://creativecommons.org/licenses/by-nc/4.0/"; "Wed Oct 23 17:50:05 2019"; "https://creativecommons.org/licenses/by-nc/4.0/"; "Research Paper"; "522", "393"; "Working paper (Federal Reserve Bank of Minneapolis. Research Department)"; "661"; ; ; ; ; "Federal Reserve Bank of Minneapolis. Research Department"; ; "Publication" . ; .