Economics at your fingertips  

A New Keynesian Model with Robots: Implications for Business Cycles and Monetary Policy

Tsu-ting Tim Lin () and Charles L. Weise
Additional contact information
Tsu-ting Tim Lin: Gettysburg College
Charles L. Weise: Gettysburg College

Atlantic Economic Journal, 2019, vol. 47, issue 1, 81-101

Abstract: Abstract This paper examines the effects of labor-replacing capital, referred to as robots, on business cycle dynamics using a New Keynesian model with a role for both traditional and robot capital. This study finds that shocks to the price of robots have effects on wages, output, and employment that are distinct from shocks to the price of traditional capital. Further, the inclusion of robots alters the response of employment and labor’s share to total factor productivity and monetary policy shocks. The presence of robots also weakens the correlation between human labor and output and the correlation between human labor and labor’s share. The paper finds that monetary policymakers would need to place a greater emphasis on output stabilization if their objective is to minimize a weighted average of output and inflation volatility. Moreover, if policymakers have an employment stabilization objective apart from their output stabilization objective, they would have to further focus on output stabilization due to the deterioration of the output-employment correlation.

Keywords: Robotization; Labor’s share of income; Monetary policy; Business cycle fluctuations; E22; E24; E25; E32; E52 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/11293/PS2

Access Statistics for this article

Atlantic Economic Journal is currently edited by Kathleen S. Virgo

More articles in Atlantic Economic Journal from Springer, International Atlantic Economic Society Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().

Page updated 2019-05-25
Handle: RePEc:kap:atlecj:v:47:y:2019:i:1:d:10.1007_s11293-019-09613-w