QUARTERLY JOURNAL OF ECONOMICS nominal variables are assumed to be more economical than frequent small changes. The models also share the assumption that the time between successive price revisions is preset, and hence unresponsive to shocks to the economy. This assumption is questionable both at the microeconomic level and in the aggregate. Formal microeco nomic models(e. g, Sheshinski and Weiss [1983 ])strongly suggest that more rapid inflation will shorten the time between price revisions. Empirical evidence against the fixed timing assumption is presented by Cecchetti [1986] and Liebermann and Zilbefarb [1985]. At the aggregate level large monetary shocks may increase the number of agents revising their nominal prices in a given period This in turn reduces the extent of price level inertia. An important open question remains: what are the real effects of monetary shocks with endogenous timing of price revisions? The present paper assumes that individual firms adjust their prices using(s, S)pricing policies of Sheshinski and Weiss [1977, 183]. To model asynchronization, we make a cross-sectional assumption on initial prices. The price level is derived endoge nously by aggregating across firms. aggregate price stickiness then vanishes despite the presence of nominal price rigidity and imper fectly synchronized price revisions. The presence of relative price variability as a consequence of inflation is also observed endogenously through aggregation of cross-sectional price data. A simple formula is derived linking nominal price adjustment by firms with cross-sectional variability of inflation rates The basic model is outlined in Section II. The neutrality proposition is presented in Section III. In Section iv the model is applied to study relative price variability. Section V provides further discussion of the model and its assumptions. Conclusions are given in Section VI. II. THE MODEI IIA. The Aggregate Setting We provide an aggregate model of price dynamics with individ ual firms pursuing asynchronous(s, S) pricing policies. The struc ture of the aggregate model is kept as simple as possible to highlight the distinction between our model and others with asynchronous ts of nomina ption is rotemberg [1983]who considers instead increasing marginal 1. An e704 QUARTERLY JOURNAL OF ECONOMICS nominal variables are assumed to be more economical than frequent small changes.' The models also share the assumption that the time between successive price revisions is preset, and hence unresponsive to shocks to the economy. This assumption is questionable both at the microeconomic level and in the aggregate. Formal microeco￾nomic models (e.g., Sheshinski and Weiss [1983]) strongly suggest that more rapid inflation will shorten the time between price revisions. Empirical evidence against the fixed timing assumption is presented by Cecchetti [I9861 and Liebermann and Zilbefarb [1985]. At the aggregate level large monetary shocks may increase the number of agents revising their nominal prices in a given period. This in turn reduces the extent of price level inertia. An important open question remains: what are the real effects of monetary shocks with endogenous timing of price revisions? The present paper assumes that individual firms adjust their prices using (s,S) pricing policies of Sheshinski and Weiss [1977, 19831. To model asynchronization, we make a cross-sectional assumption on initial prices. The price level is derived endoge￾nously by aggregating across firms. Aggregate price stickiness then vanishes despite the presence of nominal price rigidity and imper￾fectly synchronized price revisions. The presence of relative price variability as a consequence of inflation is also observed endogenously through aggregation of cross-sectional price data. A simple formula is derived linking nominal price adjustment by firms with cross-sectional variability of inflation rates. The basic model is outlined in Section 11. The neutrality proposition is presented in Section 111. In Section IV the model is applied to study relative price variability. Section V provides further discussion of the model and its assumptions. Conclusions are given in Section V1. IIA. The Aggregate Setting We provide an aggregate model of price dynamics with individ￾ual firms pursuing asynchronous (s,S) pricing policies. The struc￾ture of the aggregate model is kept as simple as possible to highlight the distinction between our model and others with asynchronous 1. An exception is Rotemberg [I9831who considers instead increasing marginal costs of nominal price revisions