Price-setting with quadratic adjustment costs
- We test the price-setting behavior of firms using the Rotemberg (1982) model in order to explain puzzles in the New Keynesian Phillips curve (NKPC). For our tests, we conducted experiments that adapt the model into an individual decision-making problem. We find systematic deviations in price-setting according to the subjects’ degree of information acquisition. Subjects rarely make use of past information. On the other hand, subjects that decide to acquire relatively little information about future desired prices tend to overweight their own past set price when they set prices. We study the impact of this heterogeneous price-setting behavior for theoretically derived forward-looking Phillips curves. Our estimated NKPCs are in line with the empirical literature. The deviations from theoretical predictions in our NKPCs are driven by the less-informed subjects.
Verfasserangaben: | Andreas OrlandORCiDGND, Michael W. M. RoosORCiDGND |
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DOI: | https://doi.org/10.1016/j.jebo.2019.05.010 |
ISSN: | 0167-2681 |
ISSN: | 1879-1751 |
Titel des übergeordneten Werks (Englisch): | Journal of economic behavior & organization |
Untertitel (Englisch): | experimental evidence |
Verlag: | Elsevier |
Verlagsort: | Amsterdam |
Publikationstyp: | Wissenschaftlicher Artikel |
Sprache: | Englisch |
Jahr der Erstveröffentlichung: | 2019 |
Erscheinungsjahr: | 2019 |
Datum der Freischaltung: | 15.01.2021 |
Freies Schlagwort / Tag: | Experimental macroeconomics; Intertemporal optimization; Nominal frictions; Phillips curve |
Band: | 163 |
Seitenanzahl: | 29 |
Erste Seite: | 88 |
Letzte Seite: | 116 |
Organisationseinheiten: | Wirtschafts- und Sozialwissenschaftliche Fakultät / Wirtschaftswissenschaften / Fachgruppe Volkswirtschaftslehre |
DDC-Klassifikation: | 3 Sozialwissenschaften / 33 Wirtschaft |