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Paper #1794

Monetary policy in the age of automation
Luca Fornaro i Martin Wolf
Juliol 2021
We provide a framework in which monetary policy affects firms' automation decisions (i.e. how intensively capital and labor are used in production). This new feature has far-reaching consequences for monetary policy. Monetary tightenings may depress firms' use of automation technologies and labor productivity, even permanently, while having a transitory impact on inflation and employment. A protracted period of weak demand might translate into less investment and de-automation, rather than into deflation and involuntary unemployment. Technological advances that increase the scope for automation may give rise to persistent unemployment, unless they are accompanied by expansionary macroeconomic policies.
Paraules clau:
monetary policy, automation, fiscal expansions, hysteresis, liquidity traps, secular stagnation, endogenous productivity, wages
Codis JEL:
E32, E43, E52, O31, O42
Àrea de Recerca:
Macroeconomia i Economia Internacional

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