Abstract

Staggered wage contracts have become a widely utilized framework for modelling nominal wage stickiness and for assessing its macroeconomic consequences, including for the transmission of monetary shocks. This article provides a heuristic description of the staggered contracts model, motivates its salient features, and discusses its evolution.KeywordsContract multiplierGreat depressionInflation inertiaKeynes, J. MMonetary transmission mechanismOutput gapStaggered wage contractsSticky wages and staggered wage settingThornton, HTime-dependent’ pricingWage indexationWage rigidityJEL ClassificationJ30

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