What happens when the Fed fights inflation (Milton Friedman, Anna Schwartz, the Romers) And when the Fed fails to deal with tech shocks (Susanto Basu, John Fernald and Miles) Shows monetary policy matters. But it wouldn't matter much with flex prices. We know then that prices must be sticky. For sticky prices, we need price setters. So we need imperfect competition. Suppose perfect competition instead: Then prices would be set on exchanges. We see that for some goods, but not for most.Most goods and services have pricing power.