EXCHANGE RATE POLICY WHEN THE LABOUR MARKET EXHIBITS HYSTERESIS(*)
Article Abstract:
Currency devaluation can have beneficial effects in the long term under conditions of labor market hysteresis. Analysis suggests the Irish devaluation of 1993 could have been increased significantly. The effects of changes in exchange rate are examined for a three-sector small open economy under full employment with a perfectly flexible labor market. The model is then extended to cover labor-market hysteresis.
Publication Name: Manchester School
Subject: Economics
ISSN: 1463-6786
Year: 1998
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Linear-quadratic solution methods to non-linear stochastic models: a note
Article Abstract:
Linear-quadratic solution methods are effective in providing solution to nonlinear rational expectations models. Closed form solutions are generally unavailable in nonlinear rational models. No specific software program can provide the solutions. The linear-quadratic methods offer solutions and require the least amount of change to the basic program for the nonlinear model.
Publication Name: Manchester School
Subject: Economics
ISSN: 1463-6786
Year: 1998
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Adjustment asymmetries and hysteresis in simple dynamic models
Article Abstract:
Disequilibrium time paths containing variables that display adjustment asymmetries are able to generate hysteresis without unit root existence. Despite formal models that first-order difference equations require unit roots, endogenous variable behavior can create hysteresis irrespective of unit roots. Such variables include an alleged exogenous argument or coefficient.
Publication Name: Manchester School
Subject: Economics
ISSN: 1463-6786
Year: 1998
User Contributions:
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