Virtually Everywhere? Digitalisation and the Euro Area and EU Economies

137 Pages Posted: 30 Jun 2020

See all articles by Robert Anderton

Robert Anderton

European Central Bank (ECB)

Valerie Jarvis

European Central Bank (ECB)

Vincent Labhard

European Central Bank (ECB) - Directorate General Economics

Filippos Petroulakis

European Central Bank (ECB)

Lara Vivian

European Central Bank (ECB)

Date Written: June, 2020

Abstract

Digitalisation can be viewed as a major supply/technology shock affecting macroeconomic aggregates that are important for monetary policy, such as output, productivity, investment, employment and prices. This paper takes stock of developments in the digital economy and their possible impacts across the euro area and European Union (EU) economies. It also compares how these economies fare relative to other major economies such as that of the United States. The paper concludes that: (i) there is significant country heterogeneity across the EU in terms of the adoption of digital technologies, and most EU countries are falling behind competitors, particularly the United States; (ii) digitalisation is affecting the economy through a number of channels, including productivity, employment, competition and prices; (iii) digitalisation raises productivity and lowers prices, similarly to other supply/technology shocks; (iv) this has implications for monetary policy and its transmission; and (v) structural and other policies may need to be adapted for the euro area and EU countries to fully reap the potential gains from digitalisation, while maintaining inclusiveness.

Keywords: digital technology, euro area and EU economies, human/intangible capital, inflation, labour market, potential growth, productivity, technology shocks/adoption/diffusion

JEL Classification: E22, E24, E31, E32, O33, O52

Suggested Citation

Anderton, Robert and Jarvis, Valerie and Labhard, Vincent and Petroulakis, Filippos and Vivian, Lara, Virtually Everywhere? Digitalisation and the Euro Area and EU Economies (June, 2020). ECB Occasional Paper No. 2020244, Available at SSRN: https://ssrn.com/abstract=3638069

Robert Anderton (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
0049 69 13440 (Phone)
0044 69 1344 6000 (Fax)

Valerie Jarvis

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Vincent Labhard

European Central Bank (ECB) - Directorate General Economics ( email )

Kaiserstrasse 29
D-60311 Frankfurt am Main
Germany

Filippos Petroulakis

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

HOME PAGE: http://sites.google.com/site/filippospetroulakis/

Lara Vivian

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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