@article {19082, title = {Asymmetric Price Adjustment and Economic Fluctuations}, journal = {Economic Journal}, volume = {104}, number = {Mar}, year = {1994}, pages = {247-261}, abstract = {This paper considers a possible explanation for asymmetric adjustment of nominal prices. We present a menu-cost model in which positive trend inflation causes firms{\textquoteright} relative prices to decline automatically between price adjustments. In this environment, shocks that raise firms{\textquoteright} desired prices trigger larger price responses than shocks that lower desired prices. We use this model of asymmetric adjustment to address three issues in macroeconomics: the effects of aggregate demand, the effects of sectoral shocks, and the optimal rate of inflation. }, author = {N.G. Mankiw and Laurence Ball} }