A finding that lagged inflation helps explain the behavior of current inflation in Phillips-curve-type specifications is generally thought to imply a departure from optimality in the pricing behavior of firms. Popular explanations either involve some fraction of firms using a backward-looking...

In the last ten years there has been an explosion of empirical work examining price setting behavior at the micro level. The work has in turn challenged existing macro models that attempt to explain monetary nonneutrality, because these models are generally at odds with much of the micro price...

[REVISED AUG 2019]In the last fifteen years there has been an explosion of empirical work examining price setting behavior at the micro level. The work has in turn challenged existing macro models that attempt to explain monetary nonneutrality, because these models are generally at odds with...