Digitalisation: Channels, Impacts and Implications for Monetary Policy in the Euro Area

164 Pages Posted: 23 Sep 2021 Last revised: 18 Nov 2021

See all articles by Agostino Consolo

Agostino Consolo

European Central Bank; ECB; Bocconi University

Gilbert Cette

Banque de France

Antonin Bergeaud

Banque de France

Vincent Labhard

European Central Bank (ECB) - Directorate General Economics

Chiara Osbat

European Central Bank (ECB)

Stanimira Kosekova

European Central Bank (ECB)

Gaetano Basso

Bank of Italy

Henrique Basso

Banco de España

Elena Bobeica

European Central Bank (ECB)

Emanuela Ciapanna

Bank of Italy

Luca Dedola

Bank of Italy; European Central Bank (ECB)

Claudia Foroni

European Central Bank (ECB)

Hanna Freystatter

Bank of Finland

Celestino Giron

European Central Bank (ECB)

Benny Hartwig

Goethe University Frankfurt; European Central Bank

Mario Izquierdo Peinado

Banco de España

Valerie Jarvis

European Central Bank (ECB)

Eduardo Maqui Lopez

European Central Bank (ECB)

Matthias F. Mohr

European Central Bank (ECB)

Richard Morris

European Central Bank (ECB)

Gergő Motyovszki

European Central Bank (ECB)

Anton Nakov

European Central Bank (ECB); CEPR

Pedro Neves Rebelo

European Central Bank (ECB)

Filippos Petroulakis

European Central Bank (ECB)

Ieva Rubene

European Central Bank

Riccardo Trezzi

Board of Governors of the Federal Reserve System

Lara Vivian

European Central Bank (ECB)

Date Written: September, 2021

Abstract

The digitalisation workstream report analyses the degree of digital adoption across the euro area and EU countries and the implications of digitalisation for measurement, productivity, labour markets and inflation, as well as more recent developments during the coronavirus (COVID-19) pandemic and their implications. Analysis of these key issues and variables is aimed at improving our understanding of the implications of digitalisation for monetary policy and its transmission. The degree of digital adoption differs across the euro area/EU, implying heterogeneous impacts, with most EU economies currently lagging behind the United States and Japan. Rising digitalisation has rendered price measurement more challenging, owing to, among other things, faster changes in products and product quality, but also new ways of price setting, e.g. dynamic or customised pricing, and services that were previously payable but are now “free”. Despite the spread of digital technologies, aggregate productivity growth has decreased in most advanced economies since the 1970s. However, it is likely that without the spread of digital technologies the productivity slowdown would have been even more pronounced, and the recent acceleration in digitalisation is likely to boost future productivity gains from digitalisation. Digitalisation has spurred greater automation, with temporary labour market disruptions, albeit unevenly across sectors. The long-run employment effects of digitalisation can be benign, but its effects on wages and labour share depend on the structure of the economy and its labour market institutions. The pandemic has accelerated the use of teleworking: roughly every third job in the euro area/EU is teleworkable, although there are differences across countries. ...

Keywords: COVID-19, inflation, labour markets, measurement, productivity

JEL Classification: E24, E31, E32, O33, O57

Suggested Citation

Consolo, Agostino and Consolo, Agostino and Cette, Gilbert and Bergeaud, Antonin and Labhard, Vincent and Osbat, Chiara and Kosekova, Stanimira and Basso, Gaetano and Basso, Henrique and Bobeica, Elena and Ciapanna, Emanuela and Dedola, Luca and Foroni, Claudia and Freystatter, Hanna and Giron, Celestino and Hartwig, Benny and Peinado, Mario Izquierdo and Jarvis, Valerie and Maqui Lopez, Eduardo and Mohr, Matthias F. and Morris, Richard and Motyovszki, Gergő and Nakov, Anton A. and Rebelo, Pedro Neves and Petroulakis, Filippos and Rubene, Ieva and Trezzi, Riccardo and Vivian, Lara, Digitalisation: Channels, Impacts and Implications for Monetary Policy in the Euro Area (September, 2021). ECB Occasional Paper No. 2021266, Available at SSRN: https://ssrn.com/abstract=3928287 or http://dx.doi.org/10.2139/ssrn.3928287

Agostino Consolo (Contact Author)

European Central Bank ( email )

Sonnemannstrasse 22
Frankfurt am Main, Hessen 60314
Germany

ECB ( email )

Sonnemannstrasse 22
Frankfurt am Main, Hessen 60314
Germany

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

Gilbert Cette

Banque de France ( email )

Paris
France

Antonin Bergeaud

Banque de France ( email )

Paris
France

Vincent Labhard

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

Kaiserstrasse 29
D-60311 Frankfurt am Main
Germany

Chiara Osbat

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
+49 69 1344 6821 (Phone)
+49 69 1344 6000 (Fax)

Stanimira Kosekova

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Gaetano Basso

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Henrique Basso

Banco de España

Alcala 50
Madrid 28014
Spain

Elena Bobeica

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Emanuela Ciapanna

Bank of Italy ( email )

Research Department
Via Nazionale 91
Roma, 00184
Italy
00390647922188 (Phone)

Luca Dedola

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Claudia Foroni

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Hanna Freystatter

Bank of Finland

P.O. Box 160
Helsinki 00101
Finland

Celestino Giron

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Benny Hartwig

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

European Central Bank ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Mario Izquierdo Peinado

Banco de España

Alcala 50
Madrid 28014
Spain

Valerie Jarvis

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Eduardo Maqui Lopez

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Matthias F. Mohr

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Richard Morris

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Gergő Motyovszki

European Central Bank (ECB)

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Anton A. Nakov

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

CEPR ( email )

London
United Kingdom

Pedro Neves Rebelo

European Central Bank (ECB)

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Filippos Petroulakis

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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

Ieva Rubene

European Central Bank ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Riccardo Trezzi

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Lara Vivian

European Central Bank (ECB)

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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