The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Sticky Wages and Staggered Wage Setting

  • Christopher J. Erceg
Reference work entry


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 

JEL Classification

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Christopher J. Erceg
    • 1
  1. 1.