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.
Contract multiplier Great depression Inflation inertia Keynes, J. M Monetary transmission mechanism Output gap Staggered wage contracts Sticky wages and staggered wage setting Thornton, H Time-dependent’ pricing Wage indexation Wage rigidity
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