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Author |
|
| Name | Setterfield, Mark |
| Research field | Economics and Business |
| Career stage | professor |
| Home university/institution | New School for Social Research, NY |
| Department/Research unit at home university/institution | - |
| Chair/Working group at home institution | - |
International activity |
|
| Country | Germany |
| Location | Bochum |
| University | Ruhr-Universität Bochum (RUB) |
| Fund Research School | VIP |
| Type of activity | research stay |
| Period |
starts 01-01-2018 ends 31-12-2020 |
| Keywords | - |
| Report |
Hysteresis is a form of path dependence, a process whereby the past has a lasting influence on the present and future. “True” hysteresis, derived from theoretical physics, shows how hysteresis results from discrete switching between outcomes, in response to behavioural stimuli (shocks), among heterogeneous decision makers at the microeconomic level. “True” hysteresis therefore provides a micro-foundation for hysteresis in aggregate (macroeconomic) outcomes. A particular focus of this project is the normal rate of capacity utilization. The normal rate of capacity utilization insulates firms against unexpected changes in demand, reflected by variation in the actual rate of capacity utilization. Some economists have long held that variation in the actual rate of capacity utilization can induce variation in the normal rate – but this idea has been criticized for lacking a behavioural foundation. This project will show that “true” hysteresis can be used to provide a micro-foundation and hence, more generally, a proper behavioural foundation, for variation in the normal rate of capacity utilization induced by variation in the actual rate. June 2019 Professor Mark Setterfield’s first visit took place between June 2 and June 7, 2019. He was introduced to various members of the Economics Department and Chair of Macroeconomics by Professor Michael Roos, and participated in a seminar organized by the Chair of Macroeconomics. At the seminar, Mark presented his paper “Managing the discontent of the losers” and gave feedback on research presentations by PhD students Tom Bauerman and Franziska Hoffart. During his visit Mark held several meetings with Tom Bauerman, who he first met at the Forum for Macroeconomics and Macroeconomic Policies (FMM) conference in Berlin in October 2018 and who visited the New School for Social Research (NSSR) in March 2019. Tom and Mark continued their collaboration on a micro-founded model of hysteresis in the normal rate of capacity utilization. Plans were made to involve their colleague Federico Bassi (University of Paris, 13) in the next stage of the project, and for Tom to visit the NSSR again on October 2019, at which point it is hoped that work will begin on writing up their research. Mark also met with Franziska Hoffart in order to discuss her Palgrave Pivot book project on climate change and the responsibility of economists (co-authored with Professor Michael Roos). A particular focus of their discussion was the connection between climate change and professional responsibility on one hand, and the (lack of) pluralism in economic discourse on the other. Plans were made for Mark to comment on draft chapters of the book as they become available and for the conversation about this work to continue when Franziska visits the NSSR in October 2019. |