A Growth Model with Hysteresis Effects and Unemployment in the Czech Republic

The hysteresis hypothesis is an alternative concept which offers an interesting view on the problem of unemployment. There are many approaches for analyzing this phenomenon from macroeconomic and microeconomic point of view. In this contribution, a new insight on the hysteresis hypothesis is presented. Hysteresis effects are incorporated within the framework of growth theory. From the theoretical point of view, hysteresis is viewed as a result of selection between different multiple equilibrium paths implicated by particular fiscal policies. Using macroeconomic data of the Czech Republic, parameters of this model are calibrated. Limitations of the model axe discussed as well as further possibilities for its enrichment. Conclusions about the patterns of Czech unemployment are made.