Antonella Stirati is currently professor of Economics at Roma Tre University. She studied economics at the University of Siena (laurea in Scienze Economiche), Cambridge UK (M.Phil degree) and La Sapienza (PhD). Her research interests are in the development of the Classical-Keynesian approach, particularly in the fields of output and employment determination, income distribution, and unemployment. She wrote a book on The Theory of Wages in Classical Economics (Elgar, 1994), co-edited the three-volumes collection Sraffa and the Reconstruction of Economic Theory, (Palgrave-macmillan, 2013) and published a number of articles in academic journals and collected volumes. Her article on Inflation, Unemployment and Hysteresis has been selected as one of the best 25 articles published in the Review of Political Economy since the journal was first issued. She is also active in scientific popularization and intervenes in public debates on current issues. She co-edits the on-line journal Economia e politica.
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The prevailing wisdom that aggregate demand ‘shocks’ determine short-run cyclical fluctuations around a supply-determined equilibrium growth rate and an associated equilibrium unemployment rate (or NAIRU) has been called into question by various streams of literature in the last decades. Specifically, a recently revived literature on hysteresis finds significant persistence in the effects of recessions and negative aggregate demand shocks (Blanchard et al. 2015; Martin et al. 2015).
Contrary to conventional wisdom, government stimulus can improve the health of the economy for years after, without inflationary side effects
This paper aims to assess such tendency to return to a supply-determined potential output, independent of aggregate demand, after episodes of demand expansion.
A recent policy brief by Blanchard (2016), based on an earlier paper (Blanchard, Cerutti, Summers 2015) raises a number of interesting points concerning the NAIRU and the Phillips Curve, which are further discussed in the comment on the paper by Ball (2015).