Abstract
Taylor's (1980) notion of staggered contracts has been widely recognized as an elegant and useful tool to modelize wage-setting procedures and to generate persistence in output and employment levels. In this paper, we present an extension of Taylor's suggestion in which staggered contracts are irregular: this implies that the wage equation varies period after period recurrently and raises the issues of the non-convergence and the non-unicity of the corresponding reduced form. Then we show that a specific feedback-monetary policy may resolve this difficulty and induce a unique solution when explosive solutions are a priori forbidden. Such a monetary policy is formed by a ‘system of rules’, varying period after period recurrently.
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