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Using novel data on 300,000 firms from the Census Bureau’s Annual Business Survey over the 2016-2018 period, Daron Acemoglu of MIT and co-authors find that firms that adopt advanced technologies, such as artificial intelligence, robotics, and specialized software, tend to be larger and employ more workers compared to others in their industry. As a result, while only 2%-40% of U.S. firms adopt advanced technologies, they expose 12%-64% of U.S. employees to such technologies. The authors estimate that the use of advanced technologies is associated with 11.4% higher labor productivity and can explain 16%-30% of the labor productivity differences across small and large firms in a given industry. Smaller and older firms are less likely to adopt advanced technologies, likely reflecting the large fixed costs and organizational barriers associated with adoption. The authors also find that advanced technologies increase the demand for skilled workers but have limited impacts on overall employment.
Lisa Barrow of the Chicago Federal Reserve Bank and Wesley Morris and Lauren Sartain of the University of North Carolina at Chapel Hill find that the expansion of online courses in the University of North Carolina system had mixed effects on student outcomes. Virtual learning gave flexibility to students whose budgets, work schedules, and childcare responsibilities prevented them from attending in-person, and was used most by students who were first-generation, Pell grant recipients, older, and female. Despite this additional flexibility, students who took a higher proportion of their classes online had lower graduation rates and took fewer credit hours than their in-person counterparts. Additionally, students in online courses received both more As and more Fs than students attending in-person. The authors point to high demand for online education as evidence that it is “here to stay,” but caution that additional advising and support for non-traditional college students may be needed to make online learning a viable educational alternative.
Using a new survey measure of managers’ expectations, Nicholas Bloom from Stanford University and co-authors find that a two standard deviation increase in uncertainty about future sales is associated with a 6% decline in investment. Uncertainty is also negatively correlated with employment growth and sales. The authors show that increased uncertainty is associated with higher use of rented capital and suggest that this practice allows firms to fulfill shipments while hedging against low demand. Finally, the team compared their results to aggregate uncertainty measures in past literature, concluding that, “industry level stock-volatility can provide a good proxy for the uncertainty in both public and private firms.”
Chart courtesy of Aditya Aladangady, David Cho, Laura Feiveson, and Eugenio Pinto of the Federal Reserve; data from the Bureau of Economic Analysis
“Japan’s economy is still on its way to recovery from the pandemic and the output gap has remained in negative territory. The Bank [of Japan] projects that the output gap will turn positive at some point in the second half of this fiscal year with a recovery in the economy. The inflation rate, however, has not risen from the demand side at present. Although it is currently above 2 percent due to the pass-through to consumer prices of cost increases led by the rise in import prices, the rate is projected to decline to below 2 percent from fiscal 2023 with the effects of this pass-through waning, as I mentioned earlier,” says Haruhiko Kuroda, Governor of the Bank of Japan.
“Also… there have been extremely high uncertainties for economic and price developments at home and abroad and for financial market developments. The Bank [of Japan] will closely examine the outlook for economic activity and prices, as well as the upside and downside risks to the outlook. Based on the assessments, it will conduct appropriate monetary policy. At present, the Bank deems that it should continue with monetary easing and thereby firmly support economic activity. By doing so, it aims to provide a favorable environment for firms to raise wages and to achieve the price stability target in a sustainable and stable manner, accompanied by wage increases.”
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