Estimating Hysteresis Effects
Francesco Furlanetto - Norges Bank
The Institute of Economics will hold a seminar meeting as part of its Seminar Series on Tuesday, October 19, 2021: Francesco Furnaletto from the Norges Bank and BI Norwegian Business School will present the paper "Estimating Hysteresis Effects".
In this paper the authors identify demand shocks that can have a permanent effect on output through hysteresis effects. The authors call these shocks permanent demand shocks. They are found to be quantitatively important in the United States, in particular when the Great Recession is included in the sample. Recessions driven by permanent demand shocks lead to a permanent decline in employment and investment, while output per worker is largely unaffected. The authors find strong evidence that hysteresis transmits through a rise in long-term unemployment and a decline in labor force participation and disproportionately affects the least productive workers.
The paper can be found here.
The seminar will be held in blended mode. In person participation is possible and available seats are allocated on a first come first served basis. For online participation please use the following link.