Hysteresis and path dependence in economic analysis: formalizations, causes and implications

Amitava Dutt

Review of Keynesian Economics, 2023, vol. 11, issue 4, 435-459

Abstract: This paper argues that history, path dependence and hysteresis should have a much greater role in economic analysis than they do at present. To do so, it first reviews several meanings of hysteresis and path dependence using different abstract formulations and discusses applications of these approaches to economic analysis to examine the aspects of the economy to which they have been applied, and the causes and effects of these applications. It then suggests a taxonomy of the broad causes of path dependence. It concludes by summarizing the argument for giving these phenomena a much greater role in models and analyses, and makes some additional comments about these phenomena and their incorporation into economic analysis.

Keywords: Path dependence; hysteresis; equilibrium; economic methodology; history and economics (search for similar items in EconPapers)
JEL-codes: B41 B50 C60 E12 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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