Experimental Macroeconomics Evaluation of Coordination Favorableness at Aggregate Level

The experimental investigation of coordination issues is experiencing an upswing nowadays in macroeconomics. With the help of an experiment set in the New Keynesian framework of N-player pricing game with monopolistic competition and strategic complementarity inspired by Fehr and Tyran (2001), we address the question of coordination favorableness at the aggregate level. The results of our experimental research indicate that the extent to which coordination is favorable might, under nominal pay-off dominance, be accountable for existing nominal inertia at the aggregate level. As a result, the product might stay below its potential for a longer time, since convergence is decelerated through a strengthened channel of strategic complementarity.