Strong hysteresis versus zero-root dynamics

Amable, Bruno; Henry, Jérôme; Lordon, Frédéric; Topol, Richard

doi:10.1016/0165-1765(93)00300-d

Cited by 65 publications

(35 citation statements)

References 2 publications

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“…Another way to introduce path-dependency into consideration is to use linear models of hysteresis (Cassetti, 2006;Chang and Su, 2014;Cheng et al, 2012;Schoder, 2012), or to introduce exogenous structural changes during the traverse (see Lavoie, 1996). However, because of their linear nature, these path-dependent models cannot exhibit genuine hysteresis but merely persistence, since the steady state is still insensitive to cumulatively neutral shocks: two subsequent shocks of same magnitude but different sign do not leave any trace on the equilibrium (see Amable et al, 1994). Therefore, the system either does not remember shocks or has an elephantine memory of them, except when an exogenous structural change is explicitly taken into account.…”

Section: Introductionmentioning

confidence: 98%

Investment hysteresis and potential output: A post-Keynesian–Kaleckian agent-based approach

Bassi

Lang

2016

Economic Modelling

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Section: Introductionmentioning

confidence: 98%

Investment hysteresis and potential output: A post-Keynesian–Kaleckian agent-based approach

Bassi

Lang

2016

Economic Modelling

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“…It has been applied mainly, but not only, to the study of exchange rates dynamics (Amable et al 1991;Göcke 2003), and to unemployment . As argued by Amable et al (1993Amable et al ( , 1994 and Cross (1993Cross ( , 1995, the multiple other uses of the term 'hysteresis' are inappropriate, and these inappropriate uses can be found in economics only. 4 The definition of hysteresis used in this paper is the only one that is used in physics (from where the term originates) and biology, and which respects the mathematical properties of the concept.…”

Section: Lang and C De Perettimentioning

confidence: 96%

A strong hysteretic model of Okun’s Law: theory and a preliminary investigation

Lang

Peretti

2009

International Review of Applied Economics

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This paper presents a ‘strong hysteretic’ version of Okun’s Law, that is, a version of the law in which ‘history matters.’ In this version of the link between fluctuations in unemployment and growth, the most important past growth shock exerts an influence on the current unemployment rate. A theoretical framework is proposed in order to lay the foundations of this version of Okun’s Law. In this framework, the hysteresis property arises because a large number of heterogeneous firms discontinuously adjust their activity levels in response to fluctuations in the rate of growth. The foundations having been laid, a method for empirically testing our hysteretic Okun’s Law is presented. An algorithm permits construction of a hysteresis operator, which synthesizes, for every moment, the growth shocks that have remained in the memory bank of the unemployment rate. Empirical tests are conducted to assess the empirical relevance of this version of Okun’s Law, as compared to the more familiar linear relationship. Empirical results consistent with hysteresis are found for several of the countries in our sample.Okun’s law, unemployment fluctuations, hysteresis, E24, C52, J23,

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“…Among the most important manifestations of historical time, one can certainly mention path dependence, whereby a ‘long run or final value of a variable depends on the value of the variable in the past’ (Setterfield, 1995, p. 14). Amable et al . (1994, p. 44) argue that one must go a bit further to argue that a path‐dependent system has hysteretic properties.…”

Section: Path Dependence?mentioning

confidence: 99%

“…On the other hand, some systems may show hysteresis even though they are not zero‐root systems. Amable et al . (1994) then speak of strong hysteresis.…”

Section: Path Dependence?mentioning

confidence: 99%

A Behavioural Finance Model of Exchange Rate Expectations Within a Stock-Flow Consistent Framework

Lavoie

Daigle

2010

Metroeconomica

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The paper combines behavioural finance to a stock-flow consistent model of a two-country economy in the portfolio tradition, with imperfect asset substitutability. 'Conventionalists' and 'chartists' set their expectations of changes in exchange rates based on some assessed fundamental value and past trends, respectively. We find that exchange rate expectations have a significant effect on exchange rate movements and trade account balances during the traverse and in steady states. A flexible exchange rate regime will continue to provide stabilizing properties, as long as the proportion of chartist actors relative to other agents is not overly large.

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Strong hysteresis versus zero-root dynamics

Cited by 65 publications

References 2 publications

Investment hysteresis and potential output: A post-Keynesian–Kaleckian agent-based approach

Investment hysteresis and potential output: A post-Keynesian–Kaleckian agent-based approach

A strong hysteretic model of Okun’s Law: theory and a preliminary investigation

A Behavioural Finance Model of Exchange Rate Expectations Within a Stock-Flow Consistent Framework

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