Seminar in Macroeconomics - Monetary Policy in the Age of Automation
Time
Monday, 26. April 2021
12:00 - 13:15
Location
online
Organizer
Chair of International Economics and Political Economy
Speaker:
Martin Wolf (University of St. Gallen)
Monetary Policy in the Age of Automation
(joint with Luca Fornaro / CREI)
Abstract: We provide a framework to study the role of monetary policy in the age of automation. The key novelty is that monetary policy affects firms' technological decisions, in particular about how intensively capital and labor are used in production. This feature changes radically what monetary policy can and should accomplish. Monetary expansions can lead to increases in output even if the economy is already operating at full employment, by inducing firms to invest and automate more. A protracted period of weak demand might translate into less investment and de-automation, while having little impact on employment. Technological advances that increase the scope for automation might give rise to persistent unemployment, unless they are accompanied by expansionary macroeconomic policies.