Overall, digitalisation complicates our understanding of the transmission process from extra output to inflation. This has implications not only for the way we model the economy – and here I am thinking about possible adjustments to the New-Keynesian Phillips curve – but also for the role we devote to monetary policy.
Should monetary policy set different objectives if prices are highly flexible and the costs of inefficient price dispersion are much smaller than presumed? Too early to tell, of course, but definitely worth an in-depth investigation. Meanwhile, I welcome advances made in measuring macroeconomic aggregates in the digital economy, in particular consumer prices.