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Virtually everywhere? Digitalisation and the euro area and EU economies

Robert Anderton, Valerie Jarvis, Vincent Labhard (), Julian Morgan, Filippos Petroulakis and Lara Vivian

No 244, Occasional Paper Series from European Central Bank

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

Keywords: digital technology; euro area and EU economies; human/intangible capital; inflation; labour market; potential growth; productivity; technology shocks/adoption/diffusion (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-eec and nep-mac
Note: 339014
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