I develop a version of the New Keynesian model with insider-outsider labor markets and hysteresis that can account for … fails to deliver, with the gap between the two increasing in the degree of hysteresis. Two simple targetiing rules are shown …

Using the sticky price monetary model of exchange rate determination and the sunk cost model of trade hysteresis, we … show that a sufficiently large policy misalignment can induce hysteresis in the trade balance and thereby alter the steady …, policy, and econometric implications. Since hysteresis in our model can entail industrial dislocation and the scrappage of …

longer in place. This paper studies the importance of such "hysteresis" – the failure of an effect to reverse itself as its … underlying cause is reversed – for the welfare evaluation of corrective policies. First, we introduce hysteresis into the … then derive new formulas allowing for hysteresis. We show that, under certain conditions, the persistent effect of a short …

experiment is conducted to test the main comparative static predictions of the theory, and the results are generally supportive …