For fixed time intervals, this phenomenon is modelled using Taylor contracts.
Alan Blinder interviewed firms to determine causes of this phenomenon. In a model by Caplin and Spulber, this phenomenon exists at the individual level, but not in the aggregate. In a 2002 paper, Mankiw and Reis generalized this phenomenon to avoid predictions of disinflationary booms. For fixed time intervals, this phenomenon is modelled using Taylor contracts. Along with supplier misperceptions, this phenomenon explains the upward slope of the (*) short-run aggregate supply curve, violating neutrality of money. Opportunities for firms to leave this situation were modelled as a time-independent Poisson process in the Calvo model of this phenomenon. This phenomenon can be caused by menu costs, and was added to create the New Keynesian Phillips curve. In a classic "downward" example of this phenomenon, employers might choose to lay off workers rather than reduce wages. For 10 points, name this phenomenon in which prices resist change.
Alan Blinder interviewed firms to determine causes of this phenomenon.
nominal rigidity [or price-stickiness; or sticky prices; or wage-stickiness; accept sticky information or word forms; accept inflexible wages, inflexible prices, or word forms; prompt on price rigidity or wage rigidity; prompt on staggered price setting, staggered wage setting, staggered contracts, or similar answers]