Hysteresis and unemployment: a preliminary investigation

Rod Cross, Julia Darby, Jonathan Ireland, Laura Piscitelli

Research output: Chapter in Book/Report/Conference proceedingChapter

32 Citations (Scopus)
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Abstract

This paper points out what hysteresis is using a simple model of market entry and exit. A procedure for calculating hysteresis indices for economic time series is outlined. Some preliminary results are presented to assess the explanatory power of hysteresis variables with regard to the equilibrium rate of unemployment in the UK. We find that both natural and "unnatural" variables enter a cointegrating vector for UK unemployment 1959-1996. The natural variable is the replacement ratio. The 'unnatural' variables are the hysteresis index of the exchange rate; and hysteresis indices for the real oil price and the real interest rate.
Original languageEnglish
Title of host publicationThe Science of Hysteresis (Volume 1)
Pages667-699
Number of pages32
Publication statusPublished - 2005

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Keywords

  • mathematical modelling
  • hysteresis
  • unemployment
  • economics

Cite this

Cross, R., Darby, J., Ireland, J., & Piscitelli, L. (2005). Hysteresis and unemployment: a preliminary investigation. In The Science of Hysteresis (Volume 1) (pp. 667-699)