We examine the impact of formal adoption of inflation targeting (IT) on inflation, growth and anchoring of inflation expectations in advanced economies and emerging markets and developing economies. We find that while the early adopters of IT (pre-2000) saw declines in inflation rates following adoption, IT adopters since then have enjoyed such success in only about half the cases. Our country-level analysis-using the synthetic control method-shows that IT adoption delivers significant inflation gains in about a third of the cases. We find limited support for the concern that adoption of IT systematically leads to poorer growth outcomes.
This paper investigates how cash-in-advance (CIA) constraints on firm's production and innovation decisions affect the long-run relationship between monetary policy and innovation-based economic growth in an open economy. Firms produce differentiated goods and invest in process innovation to reduce production costs. With imperfect knowledge diffusion across countries, the country with the greater share of industry has relatively productive firms. When innovation has a stricter CIA requirement than production, higher nominal interest rates in the country with the larger (smaller) industrial share reduce (increase) productivity growth. We also examine how improved knowledge diffusion affects optimal nominal interest rate policy.
Abstract This study presents an empirical investigation regarding the role of business dynamism (BD) in driving economic development. The results reveal that BD has an escape‐competition (positive) effect and the Schumpeterian (negative) effect on incumbent firms. Mechanism analysis indicates that market competition, innovation intensity, and knowledge spillover are the channels through which BD affects incumbent firms. Moreover, the impact of reallocation is heterogeneous among city's market entry barriers and enterprise type. A decomposition analysis demonstrates that the contribution of BD to incumbents' aggregate productivity growth exhibits a steady increase over time, and this decomposition result aligns with theoretical predictions.
Abstract This paper examines the impact of changes in information and communication technologies (ICTs) on skilled and unskilled labor at the business cycle frequency. To achieve this, we construct aggregate hours series for both labor groups using the monthly outgoing rotation group of the Current Population Survey from 1994 to 2023. Our empirical analysis, conducted with a structural vector autoregressive model, shows that the working hours of both groups respond positively to ICT innovations with similar magnitudes. We demonstrate that our findings are consistent with a dynamic stochastic general equilibrium model in which ICT capital complements both skilled and unskilled labor, and suggest a plausible range of elasticity of substitution between capital and labor.
Abstract The rapid expansion of ridesharing services like Uber and Lyft has transformed urban transportation, yet their effects on crime remain underexplored. Leveraging a natural experiment from their staggered rollout across U.S. cities, this study examines how ridesharing influences crime rates. Using a two‐way fixed effects model, I find that ridesharing services reduce violent crimes by 4.6%, property crimes by 5.6%, and burglaries by 10.5%, while the baseline estimates show no significant effects on larceny, motor vehicle theft, or arson. Exploring potential mechanisms, I show that improved employment opportunities generated by ridesharing platforms play a key role in these crime reductions.
