Abstract
This paper investigates the robustness of the dynamic properties of staggered-contracts models. The author first analyzes the persistence of several different types of shocks in a model with constant nominal wages over the life of the contracts. The dynamic pattern of the effects of some types of shocks suggests problems with the staggered-contracts formulation. Second, it is shown that under the assumption of variable nominal wages during contracts, the effects of all shocks last only one period despite the existence of two-period nominal rigidities.
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