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Intangible Investment and Low Inflation: A Framework and Some Evidence
Author: Mr. Subir Lall and Mr. Li Zeng
Series:
IMF Working Papers
Volume/Issue:
Volume 2020: Issue 190
Language:
English
Publication Date:
18 Sep 2020
DOI:
https://doi.org/10.5089/9781513557335.001
ISBN:
9781513557335
ISSN:
1018-5941
Pages:
26
Keywords:
WP; intangible investment; investment; economy; Technological change; inflation; unemployment; market concentration; AS-AD framework; inflation target; import price inflation; aggregate supply supply curve; Intangible capital; Inflation targeting; Output gap; Import prices; Global; returns to scale
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund