Hysteresis in an Open Economy Model.
This paper explores the properties of an open economy model in which real exchange rate overshooting has a permanent impact on the rate of unemployment via a hysteresis mechanism. The magnitude of this effect depends on the slope of the short-run Phillips curve, the speed with which expectations adj...
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| Format: | Journal article |
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2000
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| _version_ | 1797052794967949312 |
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| author | Shaughnessy, T |
| author_facet | Shaughnessy, T |
| author_sort | Shaughnessy, T |
| collection | OXFORD |
| description | This paper explores the properties of an open economy model in which real exchange rate overshooting has a permanent impact on the rate of unemployment via a hysteresis mechanism. The magnitude of this effect depends on the slope of the short-run Phillips curve, the speed with which expectations adjust in the labour market, and on the speed with which capacity adjusts to changes in capacity utilisation. However, it does not depend on how open the economy is, although the dynamics of the adjustment process (including the extent of the initial jump in the exchange rate following a change in monetary policy) do depend on this factor. |
| first_indexed | 2024-03-06T18:35:40Z |
| format | Journal article |
| id | oxford-uuid:0b25ad11-358b-4a36-a041-c63f3079b9b6 |
| institution | University of Oxford |
| last_indexed | 2024-03-06T18:35:40Z |
| publishDate | 2000 |
| record_format | dspace |
| spelling | oxford-uuid:0b25ad11-358b-4a36-a041-c63f3079b9b62022-03-26T09:27:53ZHysteresis in an Open Economy Model.Journal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:0b25ad11-358b-4a36-a041-c63f3079b9b6Department of Economics - ePrints2000Shaughnessy, TThis paper explores the properties of an open economy model in which real exchange rate overshooting has a permanent impact on the rate of unemployment via a hysteresis mechanism. The magnitude of this effect depends on the slope of the short-run Phillips curve, the speed with which expectations adjust in the labour market, and on the speed with which capacity adjusts to changes in capacity utilisation. However, it does not depend on how open the economy is, although the dynamics of the adjustment process (including the extent of the initial jump in the exchange rate following a change in monetary policy) do depend on this factor. |
| spellingShingle | Shaughnessy, T Hysteresis in an Open Economy Model. |
| title | Hysteresis in an Open Economy Model. |
| title_full | Hysteresis in an Open Economy Model. |
| title_fullStr | Hysteresis in an Open Economy Model. |
| title_full_unstemmed | Hysteresis in an Open Economy Model. |
| title_short | Hysteresis in an Open Economy Model. |
| title_sort | hysteresis in an open economy model |
| work_keys_str_mv | AT shaughnessyt hysteresisinanopeneconomymodel |