Broadening the application of hysteresis in economics: institutions, policy lock-in, psychology, identity, and ideas

Thomas Palley

Review of Keynesian Economics, 2023, vol. 11, issue 4, 460-488

Abstract: This paper argues for broadening the application of hysteresis to institutions, policy lock-in, psychology, identity, and economic ideas. Hysteresis is an element of historical processes, and the real world is historical. That explains why hysteresis is pervasive and important. Hysteresis should be a fundamental building block of political economy. Expanding its application in economics is both an opportunity and a challenge. The opportunity is that it provides a means for incorporating political, sociological, and psychological forces, which economics tends to neglect. That will enrich economics and can also provide a mutually enriching bridge to other social sciences. The challenge is introducing such concerns raises questions about the character of economics’ knowledge claims, which is likely to trigger resistance from economists.

Keywords: Hysteresis; institutions; policy lock-in; psychology; identity; ideas (search for similar items in EconPapers)
JEL-codes: B40 E10 E12 E32 P50 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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