Seek and Ye Shall Not Find: The Absence of Hysteresis in U.S. Macroeconomic Data

Luca Benati and Thomas Lubik

Richmond Fed Economic Brief, 2021, vol. 21, issue 04

Abstract: Economists are keenly interested in longer-run economic phenomena that interact with short-run shocks and business cycles. A particularly well-known example is hysteresis, which posits that disturbances typically thought of as transitory actually can have permanent effects. While this concept is well-recognized in theoretical modeling, empirical evidence has been sparse. After conducting a thorough analysis of U.S. macroeconomic data, we conclude that there has been no hysteresis in the United States for the past 60 years.

Keywords: Economic; Growth; and; Fiscal; Policy (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedreb:92722

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