Conceptualization of Historical Time in Post Keynesian Economics

Abstract

The paper deals with a problem of conceptualization of historical time in Post Keynesian models. The authors introduce a new notion that they call hysteretic persistence, which they see as essential because such a phenomenon as path-dependence in the short-run equilibrium cannot be described by the existing of notions of hysteresis and persistence. In the field of system (ir)reversibility, drawing upon their previous research (Chytil, Maslo, 2014, 2015), the authors introduce a new notion of general reversibility, which they justify on the account that such phenomena as a shock - counter-shock sequence in both hysteretic-persistent and hysteretic systems cannot be described by either of Setterfield's (2008) notions of super-reversibility and irreversibility. Questioning Setterfield's (1998b, 1995) only too general dichotomy of lower/higher level of historical time, the authors rather suggest a characterization of historical time based on 6 attributes of high-level historical time based on the criteria of path-(in)dependence of equilibrium and (ir)reversibility. The suggested attributes underlie the authors' conceptualization scale which enables an assessment of a degree of historicity of any system. Finally, a practical application of the concept of hysteretic persistence is demonstrated on a case of Lavoie's PKA model (Lavoie, 2006) affected by a transitory demand shock. Setting the hysteretic persistence of Lavoie's PKA model into the conceptualization scale, the authors draw conclusions for a degree of historicity of this system.