The Elephant and the Butterfly: Or Hysteresis and Post Keynesian Economics

I welcome Rod Cross’s comments suggesting that the New Keynesian conceptualization of ‘hysteresis’ is ‘amenable’ and ‘relevant to the Post Keynesian understanding of economic processes’, where economic events occur in a historical context with an uncertain future. More than one-half century after Keynes’ criticism of ‘Professor Tinbergen’s Method’ (1937) of analysing time series econometrically under the assumption of stationarity, it is gratifying to note that some macroeconometricians are trying to develop an analysis that deals with changing macrofactors that both affect, and are affected by, agents’ behaviour.