Intangible Investment and Low Inflation: A Framework and Some Evidence
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Summary:
Intangible investment is growing as a share of economic activity. We present a simple framework incorporating its distinguishing characteristic of generally greater scalability and lower marginal costs than tangible investment. We show evidence that this may have contributed to more elastic aggregate supply in recent years, which is consistent with lower inflation and a flattening of the Phillips curve. This framework also highlights the channels through which technological change, a large constituent of intangible investment, may be leading to wage stagnation and greater market concentration.
Series:
Working Paper No. 2020/190
Subject:
Import prices Inflation Inflation targeting Intangible capital Labor Monetary policy National accounts Output gap Prices Production
Frequency:
regular
English
Publication Date:
September 18, 2020
ISBN/ISSN:
9781513557335/1018-5941
Stock No:
WPIEA2020190
Pages:
26
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