Definition: Staggered contracting can be explained as follows: A model can be constructed in which some agents, usually firms, cannot change their prices at will. They make a contract at some price for a specified
duration, then when that time is up can change the price. If the terms of the
contracts overlap, that is they do not all end at the same time, we say the
contracts are staggered.
An important paper on this topic was Taylor (1980) which showed that staggered contracts can have an effect of persistence -- that is, that one-time shocks can have effects that are still evolving for several periods. This is a version of a new Keynesian, sticky-price model.
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