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Play-hysteresis in supply as part of a market model

  • Göcke, Matthias

Consequences of path-dependent supply side on the market equilibrium are illustrated. Supply is only a subsystem of the entire market with its forcing variable (price) being endogenous from the perspective of the entire market. This results in feedbacks on the equilibrium of price and quantity if transient exogenous disturbances occur. Aggregate hysteresis is modelled by continuous dynamics showing similarities to 'mechanical play'. This contrast the standard firm level modelling of hysteresis resulting from discontinuous (activity/inactivity) switches. Play dynamics are captured in a simple linearized way, just by adding two parameters to a supply equation.

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Paper provided by Justus Liebig University Giessen, Center for international Development and Environmental Research (ZEU) in its series Discussion Papers with number 61.

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Date of creation: 2012
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Handle: RePEc:zbw:zeudps:61
Contact details of provider: Web page: http://www.uni-giessen.de/cms/faculties/research-centers/zeu-en/view

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  1. Laura Piscitelli, . "A Test for Strong Hysteresis," Computing in Economics and Finance 1997 2, Society for Computational Economics.
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  4. Ljungqvist, Lars, 1994. "Hysteresis in international trade: a general equilibrium analysis," Journal of International Money and Finance, Elsevier, vol. 13(4), pages 387-399, August.
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  9. Olivier J. Blanchard & Lawrence H. Summers, 1986. "Hysteresis and the European Unemployment Problem," Working papers 427, Massachusetts Institute of Technology (MIT), Department of Economics.
  10. Ansgar Belke & Matthias Göcke & Martin Günther, 2012. "Exchange Rate Bands of Inaction and Play-Hysteresis in German Exports - Sectoral Evidence for Some OECD Destinations," ROME Working Papers 201202, ROME Network.
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  12. Ansgar Belke & Matthias Göcke, 2005. "Real Options Effects on Employment: Does Exchange Rate Uncertainty Matter for Aggregation?," German Economic Review, Verein für Socialpolitik, vol. 6(2), pages 185-203, 05.
  13. Delgado, Francisco A., 1991. "Hysteresis, menu costs, and pricing with random exchange rates," Journal of Monetary Economics, Elsevier, vol. 28(3), pages 461-484, December.
  14. Cross, R. & McNamara, H. & Pokrovskii, A.V. & Kalachev, L., 2010. "Hysteresis in the fundamentals of macroeconomics," SIRE Discussion Papers 2010-36, Scottish Institute for Research in Economics (SIRE).
  15. Bentolila, Samuel & Bertola, Giuseppe, 1990. "Firing Costs and Labour Demand: How Bad Is Eurosclerosis?," Review of Economic Studies, Wiley Blackwell, vol. 57(3), pages 381-402, July.
  16. Matthias Gocke, 2001. "A Macroeconomic Model with Hysteresis in Foreign Trade," Metroeconomica, Wiley Blackwell, vol. 52(4), pages 449-473, November.
  17. Herrmann, Roland & Kramb, Marc & Mönnich, Christina, 2000. "Tariff rate quotas and the economic impacts of agricultural trade liberalization in the WTO," Discussion Papers 1, Justus Liebig University Giessen, Center for international Development and Environmental Research (ZEU).
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