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Intangible Investment and Low Inflation: A Framework and Some Evidence

Author

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  • Mr. Subir Lall
  • Mr. Li Zeng

Abstract

Intangible investment is growing as a share of economic activity. We present a simple framework incorporating its distinguishing characteristic of generally greater scalability and lower marginal costs than tangible investment. We show evidence that this may have contributed to more elastic aggregate supply in recent years, which is consistent with lower inflation and a flattening of the Phillips curve. This framework also highlights the channels through which technological change, a large constituent of intangible investment, may be leading to wage stagnation and greater market concentration.

Suggested Citation

  • Mr. Subir Lall & Mr. Li Zeng, 2020. "Intangible Investment and Low Inflation: A Framework and Some Evidence," IMF Working Papers 2020/190, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2020/190
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    Cited by:

    1. Fan, Xuecheng & Xu, Zeshui & Qin, Yong & Škare, Marinko, 2023. "Quantifying the short- and long-run impact of inflation-related price volatility on knowledge asset investment," Journal of Business Research, Elsevier, vol. 165(C).

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