Loop

A loop is a device first introduced into the theory of Lexical Morphology by Mohanan (1986). This device opens the possibility to return to level (or stratum) n-1 after the application of the word formation rules of level/stratum n.

Example
Kiparsky (1982) argues that compounding in English takes place at level 2, while regular inflection such as plural formation takes place at level 3. As a consequence, we should never find regular plurals inside compounds. However, we do find such cases (parks commissioner, systems analyst). Mohanan (1986) accounts for this by introducing a loop between the compound level and the inflection level. First, the word park undergoes pluralization, then the form parks returns to the compound level and the compound parks commissioner is formed. The introduction of the loop is a serious weakening of the Level Ordering Hypothesis, and (not surprisingly) many linguists (e.g. Halle &amp; Vergnaud (1987)) regard the loop as an admission that level ordering is not the right way to tackle the problem of morpheme ordering.

Link
Utrecht Lexicon of Linguistics