We experimentally test the price-setting behavior of firms in the Rotemberg (1982) model in order to explain puzzles in the New Keynesian Phillips curve (NKPC). By constructing categories and a quantitative measure that compare behavior with optimum we find heterogeneous price-setting behavior...

A large sample of new plants is studied to reveal detailed adjustment behavior for capital, labor and productivity. Once production has begun, capital adjusts almost as quickly as labor. Overall, capital adjustment is lumpy while labor follows a learning-by-doing model rather than a convex...