Robots and humans: The role of fiscal and monetary policies in an endogenous growth model

• Type: Article in International Scientific Journal
• Date: 2025

Authors

Afonso, Óscar (Author) FEP; Sochirca, E (Author) Other; Neves, PC (Author) Other

Journal

Title: MATHEMATICAL SOCIAL SCIENCES

Vol. 133

Pages: 49-59

ISSN: 0165-4896

Publisher: Elsevier

Indexing

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Other information

Authenticus ID: P-017-KHA

DOI: 10.1016/j.mathsocsci.2024.11.005

Abstract (EN): In this paper we develop an endogenous growth model to analyze how fiscal and monetary policies can manage the macroeconomic effects of the robotization process. We consider that unskilled labor can be replaced by robots and that: (i) the government collects tax revenues to invest in social capital and compensate those who lose their jobs; (ii) there is monetary policy with cash-in-advance restrictions; (iii) social capital contributes to increasing technological-knowledge progress. Our results confirm that robotization stimulates economic growth, but contributes to widening wage inequality between skilled and unskilled workers. We show that, under specific circumstances, an expansionary monetary policy or amore progressive taxation can attenuate such widening effect. We also show that public investment in social capital and public transfers to those who lose their jobs playa crucial role in attenuating the negative consequences of rising unemployment caused by robotization.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 11