Episode or hysteresis? Some theoretical and policy lessons from the crisis of 2008

Abstract

The post-2008 crisis seems to have come to an end in most countries, but its long-term impacts are increasingly felt by most players of the world economy. Certain economic problems were aggravated, others created by the crisis that seems to have generated significant structural and behavioral changes in most national economies and their international relations. These lasting changes are listed, and new directions for research suggested in the present paper, using an approach combining the human, the financial and the growth dimensions.

Do menu costs lead to hysteresis in aggregate output? The experiences of some agent-based simulations

“…During the slow recovery from the global financial crisis of 2008, an interesting macroeconomic puzzle has emerged: after the transitory shock of the crisis died away, most developed economies did not return to their pre-crisis growth paths, but they settled down on growth paths characterized by permanently lower levels and in many cases, by permanently lower growth rates, as well. Many economists interpret this phenomenon as a manifestation of hysteresis (Halmai -Vásáry 2011;Ball 2014;Hall 2014;Blanchard et al 2015;Török -Konka 2018). Hysteresis can be observed in a dynamic system, if a transitory shock exerts a permanent effect on its steady state (Amable et al 1993;Göcke 2002).…”