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Technological progress, globalization and low-inflation: Evidence from the United States

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  • Lei Lv
  • Zhixin Liu
  • Yingying Xu

Abstract

Since the late 1990s, particularly since the global financial crisis, the core inflation of main developed economies’ has been persistently below target. The factors hindering the achievement of inflation targets are nothing more than commodity price, oil supply, weakness of aggregate demand, and various other factors. In addition, technology and globalization have also played a significant role. This paper uses an extended hybrid New Keynesian Phillips Curve (NKPC) model to quantify the contribution of technology and globalization variables to inflation in the United States (U.S.). The analysis suggests that technology and globalization well explain the low inflation dynamics in the U.S., as the impact of globalization on domestic inflation has been weakening over the past 20 years or so, while the impact of technology on inflation has been increasing. At present, technology exerts a greater role than globalization on low-inflation in the U.S.. This raises a different perspective for understanding the phenomenon of low inflation in the U.S. and other regions.

Suggested Citation

  • Lei Lv & Zhixin Liu & Yingying Xu, 2019. "Technological progress, globalization and low-inflation: Evidence from the United States," PLOS ONE, Public Library of Science, vol. 14(4), pages 1-19, April.
    • Handle: RePEc:plo:pone00:0215366
    DOI: 10.1371/journal.pone.0215366
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    2. José Alves & João Quental Gonçalves, 2022. "How Money relates to value? An empirical examination on Gold, Silver and Bitcoin," Working Papers REM 2022/0222, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
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