Secular Stagnation: Insights from a New Keynesian Model with Hysteresis Effects

Bas van Aarle and Bas Van Aarle
Authors registered in the RePEc Author Service: Bas van Aarle

No 5797, CESifo Working Paper Series from CESifo

Abstract: To analyse the most important aspects of the Secular Stagnation hypothesis, this paper considers the effects of hysteresis in potential output in a New-Keynesian model that is extended with endogenous potential output. To do so, a number of simulations of relevant scenarios is undertaken. It is demonstrated that extending the New-Keynesian model with hysteresis has a number of crucial implications for macro-economic adjustment and macro-economic management. It is indicated how the model can contribute to a better understanding of a number of important elements of the Secular Stagnation hypothesis.

Keywords: potential output hysteresis; monetary policy; fiscal policy (search for similar items in EconPapers)
JEL-codes: E31 E43 E62 H62 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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