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- Title
Play Hysteresis in Supply or in Demand as Part of a Market Model.
- Authors
Göcke, Matthias; Werner, Laura
- 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.
- Subjects
HYSTERESIS (Economics); SUPPLY &; demand; INTERNATIONAL markets; EXPORT marketing; INPUT-output analysis; ECONOMIC development
- Publication
Metroeconomica, 2015, Vol 66, Issue 2, p339
- ISSN
0026-1386
- Publication type
Article
- DOI
10.1111/meca.12074