Paper #1794

Título:

Monetary policy in the age of automation

Autores:

Luca Fornaro y Martin Wolf

Data:

Julio 2021

Resumen:

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.

Palabras clave:

monetary policy, automation, fiscal expansions, hysteresis, liquidity traps, secular stagnation, endogenous productivity, wages

Códigos JEL:

E32, E43, E52, O31, O42

Área de investigación:

Macroeconomía y Economía Internacional

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