Journal article

Publication year: 2015

Pages: 339-374

Journal: Metroeconomica: International Review of Economics

Volume number: 66

Issue number: 2

ISSN: 0026-1386

eISSN: 1467-999X

DOI Link: https://doi.org/10.1111/meca.12074

Publisher: Wiley

Abstract: 
Consequences of economic hysteresis are illustrated based on a standard market model which is extended by hysteresis dynamics. Hysteresis is implemented in a simple linearized way, similar to mechanical play'. As a novelty, both cases, hysteresis in supply and demand, are analysed separately as an explicit part of a supply and demand model. Explicitly modelling supply versus demand side hysteresis has two advantages. (1) Since (hysteretic) supply or demand is only a subsystem of the entire market, persistent endogenous feedback effects on price and quantity are addressed. (2) Differences in the remanent effects of transient shocks between demand and supply hysteresis become obvious.

Harvard Citation style: Göcke, M. and Werner, L. (2015) Play Hysteresis in Supply or in Demand as Part of a Market Model, Metroeconomica, 66(2), pp. 339-374. https://doi.org/10.1111/meca.12074

APA Citation style: Göcke, M., & Werner, L. (2015). Play Hysteresis in Supply or in Demand as Part of a Market Model. Metroeconomica. 66(2), 339-374. https://doi.org/10.1111/meca.12074