Hysteresis and the Economy

Do temporary economic shocks like the COVID-19 recession create lasting effects on the economy?

Interview Featuring


Mark Setterfield explores how such temporary events can have enduring effects on economic outcomes, distinguishing between temporary and extreme effects and their potential to cause permanent changes. He discusses both the demand and supply sides of the economy, questioning the long-term impact of the pandemic on household behavior, labor market dynamics, and aggregate demand and supply conditions. Setterfield’s insights provide a nuanced understanding of the economy’s path-dependent nature and the role of policy interventions in mitigating adverse effects.

“Will hysteresis effects afflict the US economy during the post-COVID recovery?” Review of Keynesian Economics, 11, 4, 507-528 (2023).
“Inflation and distribution during the post-COVID recovery: a Kaleckian approach,” Journal of Post Keynesian Economics, 46, 4, 587-611 (2023).
“Political aspects of ‘buffer stock’ employment: a reconsideration,” Cambridge Journal of Economics, 47, 6, 1171-86 (2023) (with Peter Kriesler and Joseph Halevi).
Capitalism, Inclusive Growth, and Social Protection: Inherent Contradiction or Achievable Vision? Cheltenham, UK: Edward Elgar (2023) (with Hagen Krämer and Christian Proaño).

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