Hysteresis and the consequences of the coronavirus crisis
Hysteresis means that a recession can permanently lower the economy’s productive potential through long-term unemployment and investment shortfalls. Following the financial crisis, the hysteresis parameter was estimated at approximately 0.3 in eurozone countries. The effects of the coronavirus crisis are still difficult to assess, but thanks to stimulus measures the hysteresis effect was approximately two percent smaller and approximately 22,000–30,000 additional jobs were preserved. (AI translation)
- Ilkka Kiema
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