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Hysteresis in Economic Systems

Author

Listed:
  • Rod Cross

    (University of Strathclyde)

  • Michael Grinfeld

    (University of Strathclyde)

  • Laura Piscitelli

    (University of Strathclyde)

Abstract

This paper describes how the Preisach model, with its superposition of hysteresis play operators, can be applied to economic systems. At the micro level economic agents, because of fixed or sunk costs of adjustment, adjust discontinuously to changes in state variables and have different trigger points for adjustment. Illustrations of this analytical framework are provided. Simulation exercises are pursued using plausible parameter values. A programme is then constructed to yield hysteresis measures for economic time series, which are then used to test for the presence of hysteresis in steady state relationships.

Suggested Citation

  • Rod Cross & Michael Grinfeld & Laura Piscitelli, 1999. "Hysteresis in Economic Systems," Computing in Economics and Finance 1999 723, Society for Computational Economics.
    • Handle: RePEc:sce:scecf9:723
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    Cited by:

    1. Rod Cross & Julia Darby & Jonathan Ireland & Laura Piscitelli, 1999. "Hysteresis and Unemployment: a Preliminary Investigation," Computing in Economics and Finance 1999 721, Society for Computational Economics.
    2. Bryant, Amy & Richards, Timothy J., 1998. "Hysteresis And The Shortage Of Agricultural Labor," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20858, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Rod Cross & Douglas Strachan, 2001. "Three Pillars of Conventional Wisdom," Review of Political Economy, Taylor & Francis Journals, vol. 13(2), pages 181-200.
    4. Donald Katzner, 1999. "Hysteresis and the Modeling of Economic Phenomena," Review of Political Economy, Taylor & Francis Journals, vol. 11(2), pages 171-181.
    5. Hughes Hallett, A. J. & Piscitelli, Laura, 2002. "Testing for hysteresis against nonlinear alternatives," Journal of Economic Dynamics and Control, Elsevier, vol. 27(2), pages 303-327, December.
    6. Yu-Fu Chen & Gylfi Zoega, 2010. "Strong Hysteresis due to Age Effects," Dundee Discussion Papers in Economics 230, Economic Studies, University of Dundee.
    7. Joseph Halevi & Neil Hart & Peter Kriesler, 2012. "The traverse, equilibrium analysis and post-Keynesian economics," Discussion Papers 2012-32, School of Economics, The University of New South Wales.
    8. Albers, Scott, 2013. "Okun’s Law as a Pi-to-1 ratio: A harmonic / trigonometric theory as to why Okun’s Law works," MPRA Paper 46633, University Library of Munich, Germany.

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