How powerful are fiscal and monetary policies in a directed technical change model with humans and robots?

• Type: Article in International Scientific Journal
• Date: 2023

Authors

Afonso, O (Author) Other; Rosa Maria Forte (Author) FEP

Journal

Title: INTERNATIONAL JOURNAL OF FINANCE & ECONOMICS

Vol. 28I No. 3

Pages: 3008-3032

ISSN: 1076-9307

Publisher: John Wiley & Sons

Indexing

ISI Web of Knowledge - 3 Citations

Scopus - 3 Citations

Other information

Authenticus ID: P-00V-PCZ

DOI: 10.1002/ijfe.2581

Abstract (EN): We develop a dynamic general equilibrium model where robots can be substituted for unskilled labour and public authorities can use fiscal and monetary policies to influence the macroeconomic aggregates. We show that an increase in the use of robots increases the competitiveness of the unskilled sector and decreases the technological knowledge gap. However, under substitutability, unskilled workers are replaced by robots, and due to the magnitude of this effect the wage inequality increases. To mitigate this impact, public authorities can resort to fiscal and monetary policies. For instance, taxation on robots will induce the substitution of robots by unskilled labour, thus benefiting the unskilled labour-relative employment and wages.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 25