In recent years there has been an abundance of empirical work examining price setting behavior at the micro level. First generation models with price setting rigidities were generally at odds with much of the micro price data. A second generation of models, with fixed costs of price adjustment...

In models with sticky prices and monopolistic competition, the cyclical behavior of real marginal cost is a key determinant of firms' pricing decisions. Necessarily then, such behavior is closely linked to the corresponding cyclical behavior of inflation. Recent empirical work on this link...

How often do the nominal prices of individual goods change? What is the nature and magnitude of costs of price adjustment? Economists seeking to construct macroeconomic models useful for monetary policy analysis must know the answers to these questions. The empirical literature reveals that many...