Most neo-Ricardian studies on the "choice of technique" are based on a comparison of alternative technologies applicable to the same industrial branch. Some authors even recommend restrict analyses of the long-run technological changes to a single industry. In reality, innovations often require...

This paper investigates the effect of commodity price shocks in a commodity-exporting small open economy, and the role of fiscal policy in transmitting these shocks to the rest of the economy. Using South African data, we first estimate an empirical model using a Bayesian vector autoregression...

This short paper explains the theory of path dependence and clarifies its relation to concepts such as positive feedback or lock-in, arguing that path dependence is a core theoretical element of political economy in general, and institutional and evolutionary economics in particular. We first...

This short paper explains the theory of path dependence and clarifies its relation to concepts such as positive feedback or lock-in, arguing that path dependence is a core theoretical element of political economy in general, and institutional and evolutionary economics in particular. We first...

This study investigates the skill structures of European countries and their transformations from the perspective of capability development. The constructed skill space illustrates the skill sets of European nations based on product space methodology by linking skill occupation and...

The dynamics of startup activity are crucial for job creation, innovation, and a competitive economy. Does regional firm formation exhibit hysteresis, such that shocks, including those induced by temporary policy interventions, have permanent effects? Due to the pronounced heterogeneity among...

The primary objectives of this research are to compare the economic performance of the Member States (MS) in the Euro Area 12 (EA-12) of the European Union (EU) that served as net contributors and net recipients of its budget during the period 1998-2022. The comparison focuses on aspects related...

We develop a Heterogeneous Agent New Keynesian model with a three-state frictional labour market that is consistent with the empirical evidence that (i) low-skilled workers are more exposed to the business cycle, (ii) displacement leads to long-lasting earnings losses, and (iii) unemployment is...

We study how the output gap affects potential output over time-i.e., the dynamic hysteresis effect. To do so, we introduce novel unobserved components (UC) models that consider hysteresis as a sequence of lagged effects, thus separating the long-run recession-induced adverse effects from other...

This paper estimates a demand-led model of macroeconomic growth and fluctuations in which the growth rate of the economy’s supply side converges to the growth rate of demand. Convergence happens because labor supply and productivity growth respond to the degree of slack in the economy. Faster...

An important property of hysteresis is that temporary events of sufficient magnitude can have permanent effects. The COVID-19 recession in the US was both temporary and extremely deep. This invites the hypothesis that the recession had permanent effects on the US economy as a result of...

Business fluctuations can be estimated as the product of perturbations that do not need to be broken down into supply and demand shocks. Joint supply and demand (S&D) shocks can help estimate the cycle in the output gap as well as a cycle in trend output. The model is a univariate trend-cycle...

We use the discovery of gold in Brazil as a historical quasi-experiment and show that gold roads are positively associated with population density and nightlight incidence in contemporary times. We then use official documents from the 19th century to build a nationwide transportation network...

We develop an original method for identifying the structural parameters of the production function and estimate the rate of capacity utilization in 12 EU countries. Our results provide evidence of persistent excess capacity and hysteresis in many EU countries, especially after the 2008’s...

We explore how optimal emission abatement trajectories are affected by dynamic characteristics of greenhouse-gas emitting systems, such as inertia, induced innovation, and pathdependency, by formulating a compact and analytically tractable model with stylized damage assumptions to derive the...