 Digitalization and Inflation: A Review of the LiteratureKaryne Charbonneau, Alexa Evans, Subrata Sarker and Lena Suchanek Staff Analytical Notes from Bank of Canada Abstract: In the past few years, many have postulated that the possible disinflationary effects of digitalization could explain the subdued inflation in advanced economies. In this note, we review the evidence found in the literature. We look at three main channels. First, we find that changes in the prices of information and communication technology-related goods and services included in the CPI have had a negligible effect on inflation in Canada. Second, we find that, due to the small share of e-commerce in Canada and the remarkably similar behaviour of online and offline prices, the “Amazon effect” has only had a small disinflationary impact to date. As e-commerce grows, however, downward pressure on inflation may amplify in the future through increased competition, but digitalization may also increase market concentration. Finally, although cost-efficient technologies should lead to increased productivity, which would put downward pressure on inflation, this effect has yet to appear in the statistics. Overall, we find it unlikely that digitalization has so far had a significant effect on inflation in Canada. Keywords: Inflation and prices; Market structure and pricing; Productivity (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bca:bocsan:17-20 Access Statistics for this paper More papers in Staff Analytical Notes from Bank of Canada 234 Wellington Street, Ottawa, Ontario, K1A 0G9, Canada. Contact information at EDIRC. |
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