A theory of economic policy lock-in and lock-out via hysteresis: Rethinking economists' approach to economic policy

Thomas Palley

No 2016-50, Economics Discussion Papers from Kiel Institute for the World Economy

Abstract: This paper explores lock-in and lock-out via economic policy. It argues policy decisions may near-irrevocably change the economy's structure, thereby changing its performance. That causes changed economic outcomes concerning distribution of wealth, income and power, which in turn induces locked-in changes in political outcomes. That is a different way of thinking about policy compared to conventional macroeconomic stabilization theory. The latter treats policy as a dial which is dialed up or down, depending on the economy's state. Lock-in policy is illustrated by the euro, globalization, and the neoliberal policy experiment.

Keywords: economic policy; lock-in; hysteresis; globalization; euro; neoliberalism (search for similar items in EconPapers)
JEL-codes: D7 E6 F5 H3 L5 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-hpe, nep-mac and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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http://www.economics-ejournal.org/economics/discussionpapers/2016-50
https://www.econstor.eu/bitstream/10419/148422/1/875107095.pdf (application/pdf)

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Journal Article: A theory of economic policy lock-in and lock-out via hysteresis: Rethinking economists' approach to economic policy (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:201650

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