Hysteretic convergence in a shockless economy

Shane Hutton

The purpose of this paper is to study a model of hysteresis in economics. We begin with a general overview of hysteresis and define the Preisach model. The Preisach model is the basis of an economic model developed by Piscitelli, Grinfeld, Lamba, & Cross (1999). One of the basic theorems about their model is concerned with convergence in a shockless economy. We show that the proof of this theorem in Piscitelli et al. (1999) is flawed by giving counterexamples to some crucial assertions. However, after considering multiple examples, we were unable to find a counterexample to the theorem itself.