as a result of technology, globalization has become

The U.S. dollar index has a significant negative effect on domestic inflation in the pre-2008 period, while the other control variables are not significant in these two periods. A number of organizations, such as Code.org, Black Girls Code, and Black Boys Code, work to overcome the disparity by offering computer science education programs and camps, collaborative instruction programs with local school districts, and (perhaps most impactful in the long term) teacher training programs. The theoretical model (2) implies that HNKPC is stable in the short term, and inflation varies along a fixed HNKPC, without considering that HNKPC may move under various shocks. The weighted average of the output gaps of the major trading partners of the countries studied is used as the countrys foreign output gap. The reason lies in the limited data availability over time for the DAI. Technological access tends to be clustered around urban areas and leaves out vast swaths of citizens. To assess the robustness of the baseline finding that the impact of globalization and technology on inflation dynamics changes before and after 2008 in the U.S., we conduct two sets of sensitivity studies. Create a free account and access your personalized content collection with our latest publications and analyses. The baseline estimation of model (3) involves series for inflation t, inflation expectations Ett+1, domestic output gap , a measure of the foreign real output gap , the drag of the technology variable techt, U.S. dollar index USDXt, federal funds rate rt and nonfarm labor productivity NLPt. That is, changes in the U.S. dollar index will drive the opposite direction of inflation. However, when considering structural break, the results have changed. Among them, the coefficient 1 measures the degree of influence of past inflation on current inflation, which is the intensity of inflation inertia; and measures the degree of influence of future inflation expectations on current inflation, that is the intensity of inflation expectations. Technological globalization is accelerated in large part by technological diffusion, or the spread of technology across borders. The results for the dummy tests also cannot help identify a clear break point for the underlying model. Information technology (IT) was key to the superior overall macroeconomic performance of the United States in the 1990shigh productivity, high growth, low inflation, and low unemployment. Chinas slowdown, demographics, globalization, and transitory factors are commonly cited reasons for the common low inflation phenomenon. This study adopts the extended HNKPC to examine the driving factors in determinants of low inflation in the United States. In general, the report found that technological progress and economic growth rates were linked, and that the rise in technological progress helped improve the situations of many living in extreme poverty (World Bank 2008). While the growth of technology use among countries has increased dramatically over the past several decades, the spread of technology within countries is significantly slower forcertain nations. Data and research help us understand these challenges and set priorities, share knowledge of what works, and measure progress. The tenth row is the weak IV refer to weak instrumental variables (IV) test. Technological globalization refers to the cross-cultural development and exchange of technology. Furthermore, the research literature on the impact of technology on inflation is usually based on descriptive and commentary analysis rather than quantitative estimation [14, 27, 31, 32, 34, 35]. Making Returns on Knowledge - How Innovation Can Flow from Globalisation. Based on the above description, Table 3 reports the estimation (GMM) results for model (3) over the whole sample, pre- and post-2008:Q2,where the first 28 rows are the estimated value and the NeweyWest (fixed bandwidth) HAC robust standard errors of the core parameters in the model. Globalization, health, and ICT. In recent years, many scholars have postulated that the possible disinflationary effects of technical application (such as digitalization and e-commerce) could explain the subdued inflation in advanced and emerging market economies. This finding indicates that we should take into account the developments in global economic performance and technology innovation trends in understanding the dynamic process of inflation. Meanwhile, the coefficient of the foreign output gap improves from the insignificant and negative value of -0.01 to significant and positive value of 0.02. However, this story is not fully convincing, and inflation may not have become globalized, as evinced by some observers. We provide a wide array of financial products and technical assistance, and we help countries share and apply innovative knowledge and solutions to the challenges they face. The impact of technology and globalization on inflation remains an issue, in that those two factors are important reasons for the difficulties that central banks face in achieving their mandates, and policy-makers must continue to monitor them. According to the type of IT summarized in the literature, we identify technology-related inputs in the I-O data as follows: computer and electronic products tech1; broadcasting and telecommunications tech2; data processing, internet publishing and other information services tech3; and computer systems design and related services tech4. Meanwhile, Dewett and Jones's [53] review paper made a detailed review on the information technology (IT) including 37 papers within the last five years that have been published in six leading management journals. However, most experts agree that the COVID-19 pandemic revealed that thedigital dividehas persisted, particularly in education. Business. Some question why it still exists after having been identified more than twenty years ago. The foreign output gap in 2002 and 2009 coincides exactly with the lowest point of the core inflation rate in these periods, and the crest point is also in line with the peak of core inflation in 2008 and 2012. Higher productivity translates directly into lower production costs. Which situation has become more common as a result of globalization? Second, judging from the changing trend of the impact of variables, the impact of the domestic and foreign output gap on domestic inflation is weakening, whereas the impact of technology on inflation is increasing. The decreasing unemployment rate indicates that the U.S. labor market has recovered strongly and inflation is close to the FED's 2% target, which creates a sufficient policy space for the Fed's future projects. Second, it can be found that the output gap in the U.S. is smoother than each trading partner countries. Our empirical investigations show that there is a significant structural change in 2008 in the extended NKPC model for the U.S., and we present three additional findings that add to the literature on U.S. low inflation dynamics. When considering education, policymakers faced arduous decision-making processes and contentious debates as they tried the balance the issues of safety, educational quality, teacher safety, student mental health, and the overall changing landscape of the pandemic. Generally, the core inflation in the U.S. has been persistently below target since 2009, but the unemployment rates decreased from 7.7% (in 2010) to 4.3% (2017), as shown in Fig 1. Group (2) and (3) prove that the impacts of the domestic output gap, the foreign output gap, and technology on inflation change during the period around 2008. Social Media Use 2018: Demographics and Statistics. As can be seen from the results in Table 1, asymptotic one-sided p-values [65] for four variables (inflation expectations, foreign real output gap, technical drag variables and federal funds rate) break test statistics are significant at different significance levels (5% and 1%). The increase in total demand is suppressed due to the artificial replacement, which may lead to deflationary effects. He represents Brazil, Colombia, Dominican Republic, Ecuador, Haiti, Panama, Philippines, Suriname, and Trinidad & Tobago. The baseline results reported in groups (1), (2), and (3) in Table 3 reveal significant changes in the impact of the domestic output gaps, foreign output gaps, and technical drag variables on U.S. inflation over different sample periods. Washington, DC: The National Academies Press. Does it matter to you who owns your local news outlets? This inconsistent experience leads to an alternative specification of the above relationship, namely the Hybrid New Keynesian Phillips Curve, in which the explanatory variable also contains lagging inflation: Third, globalization and technology have different effects on inflation in the United States. Cell phone usage in Africa has increased rapidly in African nations, with two-fifths of sub-saharan Africans owning cell phones in 2016, and nine out of ten people owning cell phones in South Africa, Nigeria, and Ghana. He has authored and co-edited 7 books and over 160 book chapters and academic articles, and is a frequent contributor to numerous Blogs and Periodicals: Capital Finance International; Huffington Post; Project Syndicate; VoxEU; Roubini Global Economics; Seeking Alpha; No Se Mancha, and Columbia Global Centers. In early 2021, Myanmars military launched a coup against its government. Discover a faster, simpler path to publishing in a high-quality journal. As for the contribution of technology price to price increases in various industries, the weights of technical inputs are calculated using the prices in each year, (quarterly observations within one year use the same weight of the year). In short, the gap gets wider faster. The tech variable can be capturing the first component (and it is strong enough to lower overall inflation), while the second component (unit labor costs) as a control variable in our analysis. The first is differential class-based access to technology in the form of the digital divide. One result of it is countries, businesses, and people become increasingly interdependent. Zhang et al. However, in the real economy, severe exogenous shocks, such as institutional changes, changes in macroeconomic policies, and financial crises, may cause the data generation process of variable sequences to occur structural mutations. This may lead to the impact of foreign output gap variable on U.S. domestic inflation to become significant. Others can use mobile phones and some of the emerging money-sending systems to securely transfer money to a family member or business partner elsewhere (Katine 2010). Eighty-eight of 18- to 29-year-olds indicate that they use some form of social media. In Brazil, in the year 2003, he was State Secretary for International Affairs at the Ministry of Finance. broad scope, and wide readership a perfect fit for your research every time. The nation blocks the use of certain terms, such as human rights, and passes new laws that require people to register with their real names and make it more dangerous to criticize government actions. It notices that except for foreign output gap and technical drag variables in 2008, the three variables have the same significance at the 1% level in all break points sample period. When foreign output gap is not considered, the coefficient of domestic output gap is not significant. This digital divide has led to the second form, a knowledge gap, which is, as it sounds, an ongoing and increasing gap in information for those who have less access to technology. Sharing of ideas, information, goods, and services through globalization is also possible because of advances in communication technology and the media. To compensate for the deficiencies of the traditional unit root test, Perron [58] pioneered the unit root test of structural breaks. It may be pictured as the threads of an immense spider web formed over millennia, with the . Research demonstrates that technology use and Internet access still vary a great deal by race, class, and age in the United States, though most studies agree that there is minimal difference in Internet use by adult men and adult women. With the emergence of digital technology, artificial intelligence and remote intelligence, a "third unbundling" is unfolding telepresence, telerobotics and telemigration will radically reduce. Wed love your input. But approximately one in four Black and Hispanic people reported being smartphone-only Internet users, a number that far outpaces White peoples reliance on the devices. Copyright: 2019 Lv et al. (Photo courtesy of Cambodia4kidsorg/flickr). The results show that the globalization factor has a positive effect on U.S. inflation, but only at the 10% significance level. (2016, August 10). As already noted in Fig 1, the core inflation rate remains above 2% in 2006 while it goes below the 2% level in 2008, at which time the financial crisis erupted. Meanwhile, the core inflation has been an important index that attracts attention of many currency governments such as Federal Reserve [50], the European Central Bank [51], and the Bank of Japan [52]. Meanwhile, the technology plays a large role compared with the foreign output gap in driving domestic inflation in terms of the magnitude of the coefficients. For the full sample period of 19992016, we note that if the model establishment without the foreign output gap and technology variables, the point estimate of the domestic output gap does not change,. This technological stratification has led to a new focus on ensuring better access for all. For example, the rigid structure of some economies may hinder the response of the pricing process to globalization. Economics questions and answers. Introduction 2. Citation: Lv L, Liu Z, Xu Y (2019) Technological progress, globalization and low-inflation: Evidence from the United States. Is your academic technology at the cusp of innovation, relatively disadvantaged, or somewhere in between? The rationality of instrumental variable selection is further determined by Hansen's J test [64], which assumes that all instrumental variables are exogenous, and if the null hypothesis is not rejected, the choice of instrumental variables is relatively reasonable. (2). One potential outcome of reduced home Internet and computer access can be the relatively low representation of certain populations in computing courses, computing majors, and computing careers. On the other hand, trade openness plays an important role in attracting foreign direct investment, which is likely to affect the globalization and technology progress in particularly the trading countries such as Brazil, Russia, India, China, and South Africa (BRICS) and Mexico, Indonesia, Nigeria, and Turkey (MINT) [35]. Figure 3. Is it owned by a large conglomerate (you can do a web search and find out!)? Industries are defined according to the 2007 North American Industry Classification System. On the other hand, as technology is more prominently used to produce more goods and services, companies in all industries are achieving lower production costs.

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