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We document a sizeable increase in the frequency of price adjustments following
the large energy shocks of 2022. We use a tractable New Keynesian model, calibrated
to the pre-shock data, to interpret such a pattern. The calibration highlights the
state-dependence of firms' decisions: prices are adjusted rapidly when markups are
misaligned. In the model, a large cost shock triggers a swift increase in the frequency
of price adjustments, causing a rapid pass-through from costs to prices. Time-dependent
models, as the Calvo model, miss this frequency response, failing to capture the sudden
inflation surge after a large shock.
