Nonconvex adjustment costs, hysteresis, and the macrodynamics of employment

• Type: Article in International Scientific Journal
• Date: 2012

Authors

mota, pr (Author) FEP; vasconcelos, pb (Author) FEP

Journal

Title: Journal of Post Keynesian Economics

Vol. 35 No. 1

Pages: 93-112

ISSN: 0160-3477

Publisher: Taylor & Francis

Indexing

ISI Web of Knowledge - 13 Citations

ISI Web of Science

Scopus - 12 Citations

Scientific classification

FOS: Social sciences > Economics and Business

CORDIS: Social sciences

Other information

Authenticus ID: P-002-5ND

DOI: 10.2753/pke0160-3477350106

Abstract (EN): This study provides new evidence on the effects of nonconvex employment adjustment costs at the aggregate level. Using the Preisach model of hysteresis, we find that hysteresis commonly found at the firm level due to nonconvex adjustment costs do not completely vanish at the macro level. Hysteresis signs are particularly present in small firms and less so in large ones. The consequence is that the equilibrium state of employment, instead of being unique, becomes path dependent, that is, determined by the history of previous adjustments. The key implication is that macroeconomic policies designed to stimulate the economy may have long-run effects.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 20