what is hysteresis 
hysteresis in the field of economics refers to an event in the economy that persists even after the factors that led to that event have been removed or otherwise run their course hysteresis often occurs following extreme or prolonged economic events such as an economic crash or recession after a recession for example the unemployment rate may continue to increase despite growth in the economy and the technical end of the recession understanding hysteresisthe term hysteresis was coined by sir james alfred ewing a scottish physicist and engineer to refer to systems organisms and fields that have memory in other words the consequences of some input are experienced with a certain time lag or delay one example is seen with iron iron maintains some magnetization after it has been exposed to and removed from a magnetic field 1 hysteresis is derived from the greek word meaning a coming short or a deficiency hysteresis in economics arises when a single disturbance affects the course of the economy the specific reasons for hysteresis vary depending on the precipitating event that said the persistence of a market malaise after the event has technically passed is most commonly attributed to changes in the attitudes of market participants due to the event after a market crash for example many investors are reluctant to reinvest what cash they have on hand due to their recent losses this reluctance translates to a longer period of depressed stock prices due to the attitude of investors rather than the market fundamentals types of hysteresis in economicsa common example of hysteresis is the delayed effects of unemployment where the unemployment rate can continue to rise even after the economy has begun recovering the current unemployment rate is a percentage of the number of people in an economy who are looking for work but can t find any 