Conference paper
Authors list: Belke, A; Göcke, M
Publication year: 1999
Pages: 260-286
Journal: Scottish Journal of Political Economy
Volume number: 46
Issue number: 3
ISSN: 0036-9292
DOI Link: https://doi.org/10.1111/1467-9485.00132
Conference: Econometric-Society European Meeting
Publisher: Wiley
Abstract:
A model leading to employment hysteresis due to sunk hiring- and firing-costs is proposed. A potential mechanism based on a band of inaction that could account for a 'weaker' relationship between employment and its determinants is augmented by exchange rate uncertainty. As a result of option value effects the band of inaction is widened. Thus, the hysteresis effects are strongly amplified by exchange rate uncertainty (as numerical examples demonstrate). Non-linearities in the employment-relation are implied, i.e. 'spurts' in new employment or firing may occur after an initially weak response to a reversal of the exchange rate.
Citation Styles
Harvard Citation style: Belke, A. and Göcke, M. (1999) A simple model of hysteresis in employment under exchange rate uncertainty, Scottish Journal of Political Economy, 46(3), pp. 260-286. https://doi.org/10.1111/1467-9485.00132
APA Citation style: Belke, A., & Göcke, M. (1999). A simple model of hysteresis in employment under exchange rate uncertainty. Scottish Journal of Political Economy. 46(3), 260-286. https://doi.org/10.1111/1467-9485.00132