The article discusses how temporary rigidities in prices and wages affect the relationship between money, output, and inflation. Staggered price and wage setting models best match the data on how prices and wages are determined. Recent research has focused on incorporating these models into economic frameworks and exploring their impact on business cycles. The parameters of people's preferences are closely linked to how prices and wages are set. There is ongoing debate about whether standard assumptions about preferences limit the ability of staggered price models to explain long-lasting changes in output.