Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/162762
Authors: 
Palley, Thomas
Year of Publication: 
2017
Citation: 
[Journal:] Economics: The Open-Access, Open-Assessment E-Journal [Year:] 2017 [Volume:] 11 [Issue:] 2017-18 [Pages:] 1-18
Abstract: 
This paper uses hysteresis to develop the concept of policy lock-in and lock-out. Policy changes may near-irrevocably change the economy's structure, thereby changing the distribution of wealth, income and power. That may lock-in policy by changing the political equilibrium. Exit costs that block policy reversals also cause lock-in. Conventional thinking treats policy as a dial which is adjusted according to the economy's state. Policy lock-in questions the dial formulation and raises new issues for optimal policy design. It also offers insights into economic and political crisis theory. Policy lock-in is illustrated with examples that include tax policy, government spending, the euro, globalization, and the neoliberal policy experiment.
Subjects: 
economic policy
lock-in
hysteresis
globalization
euro
neoliberalism
JEL: 
D7
E6
F5
H3
L5
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by/4.0/
Document Type: 
Article

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