Even as we improve access, we have failed to address an increasingly evident gap in e-readinessthe ability to sort through, interpret, and process knowledge (Sciadas 2003). Does it matter to you who owns your local news outlets? Since the late 1990s, particularly since the global financial crisis, the core inflation of main developed economies has been persistently below target. The Internet, Globalization and the Media Future. The most important mobile trade show, Mobile World Congress, will either be cancelled or have greatly reduced attendance (the show is scheduled to begin February 24 in Barcelona, Spain). The factors hindering the achievement of inflation targets are nothing more than commodity price, oil supply, weakness of aggregate demand, and various other factors. Drag of the technology variable were got from the Bureau of Labor Statistics Producer Price Indexes Databases. In this clip, he talks a little bit about the Journalist Resource website as well as some of the consequences of globalization. Criminalscan circumvent local laws against socially deviant and dangerous behaviors such as gambling, child pornography, and the sex trade. However, the same patterns of social inequality that create a digital divide, orthe uneven access to technology among different races, classes, and geographic areas, in the United States also create digital divides within othernations. The trend of the U.S. dollar index and the core inflation have become certain trend. Therefore, the model based on model (2) can be specified as: 30 Industrial Development for the 21st Century 2. Coined by the Intel co-founder Gordon Moore, Moore's Law has become synonymous with more powerful and cheaper technologies [14]. By 2019, some of those numbers had changed: There were only 1,000 newspapers, but over 7,000 magazines (note that both newspapers and magazines count as such even if they publish largely online) (BBC 2019). One result of it is countries, businesses, and people become increasingly interdependent. The results for the dummy tests also cannot help identify a clear break point for the underlying model. Some question why it still exists after having been identified more than twenty years ago. Section 3 describes the data used in empirical work and some stylized facts in the United States. to learn about some topics related to culture in the news (click on Society and then Culture from the dropdown menu). The total import and export volume of these 13 trading partners accounts for 67%~73% of the total import and export volume of the U.S. during the period from 1999 to 2016. This means that, in the past twenty years or so, technological innovation has significantly exceeded the impact of the domestic output gap over the inflation dynamics in the United States. This raises a different perspective for understanding the phenomenon of low inflation in the U.S. and other regions. This may lead to the impact of foreign output gap variable on U.S. domestic inflation to become significant. Information technology (IT) was key to the superior overall macroeconomic performance of the United States in the 1990shigh productivity, high growth, low inflation, and low unemployment. Which situation has become more common as a result of globalization? At the University of So Paulo and at the State University of Campinas (UNICAMP) in Brazil, he was a Professor of macro and international economics. Therefore, the current inflation rate (t) is a function of the current expected price change (Ett+1) and is usually seen as rational and is a cyclical component of economic activity (), the deviation of output or real marginal costs from their trends: Globalization broke the barrier of distance, communication, buying and selling, travelling, and so on, turning the world into a small, developed . Milani [21] explores the effect of increasing globalization on the dynamics of macroeconomic variables in the U.S. and find that sensitivity of inflation in the U.S. to global output indicators has increased over time, albeit with only minor changes. Subsequently, Zivot and Andrews [5961] proposed a unit root test for structural mutationsthe ZA test. Brookings Institution estimates that five years ago, the free flow of data contributed $2.8 trillion to the global economy, a figure that could reach $11 trillion by 2025. By finding out which markets have vendors interested in their goods, fishers and farmers can ensure they travel to the market that will serve them best and avoid a wasted trip. t is a random disturbance term with independent consistency distribution characteristics. The comparatively less fluctuating property of core inflation is more applicable in testing the effects of globalization and technology on inflation [4749]. It assumes that only a fraction of the price (1,0<<1) is adjusted during each period, while the rest () remains unchanged [38]. Economically, globalization involves goods, services, data, technology, and the . Economics questions and answers. Offshore or international web sites allow U.S. citizens (and others) to seek out whatever illegal or illicit information they want, from twenty-four hour online gambling sites that do not require proof of age, to sites that sell child pornography. In other words, the development status of technological innovation will significantly affect the trend of the domestic price change rate in the U.S. while globalization did not produce such an effect during the sample period. [4] You will read more about the influence of technology on social movements in later modules, but you can surely see examples around you of ways the technology has been used to raise awareness (like Twitter hashtags), fight stereotypes, or even change laws. The decreasing unemployment rate indicates that the U.S. labor market has recovered strongly and inflation is close to the FED's 2% target, which creates a sufficient policy space for the Fed's future projects. Cross-border flows plummeted in 2020 as the Covid-19 pandemic swept the world, reinforcing doubts about the future of globalization. When foreign output gap is not considered, the coefficient of domestic output gap is not significant. Early in the millennium, poorer communities had little or no technology access, while well-off families had personal computers at home and wired classrooms in their schools. As a result of globalization and new information and communications technology, would you expect that the definitions of markets used by antitrust authorities will become broader or narrower? Yi and Choi [33] tested the impact of e-commerce on inflation using cross-country panel data from 1991 to 2000. Therefore, it can be considered that technology will continue to have an impact on inflation, and we have no reason to believe that this trend will reverse any time soon. Chang [22] investigates the causal linkages between globalization and inflation in 21 OECD countries by using panel causality analysis for 19702010. Meanwhile, the core inflation has been an important index that attracts attention of many currency governments such as Federal Reserve [50], the European Central Bank [51], and the Bank of Japan [52]. In addition, the changing trend of the technology drag on variable is crosscurrent consistent with core inflation, but it is less volatile than is the latter. However, it is clear that the technology and the foreign output gap both play significant roles in driving the U.S. inflation after 2008. Research demonstrates that technology use and Internet access still vary a great deal by race, class, and age in the United States, though most studies agree that there is minimal difference in Internet use by adult men and adult women. The drag of the technology variable and the foreign output gap are calculated according to Davis [14]. Technological innovation has had a negative impact on inflation in many dimensions. There is, certainly, the risk of cultural imperialism, and the assumption that core nations (and core-nation multinationals) know what is best for those struggling in the worlds poorest communities. This result confirms the original intention of this paper, which is that, when discussing the inflation changes, technology is often an overlooked factor, but it may be an influential factor. Since the price component of ICT is heavily weighted in the CPI, its price changes dominate other ICT components. The results for break points being 2006: Q1 and 2011: Q3 provide a scenario similar to the baseline finding. In addition, inflation expectations has a significance break data (2008:Q2). Social effects of technology 7. Domestic output gap was sourced from the Congressional Budget Offices website. Dynamics of global business environment 3. As can be seen from the figure, the domestic and foreign output gaps have a certain degree of periodicity in the overall change trend before 2009:Q1, but there are obvious differences in the specific change trends at each time point, especially the peaks. Demographic change is also often mentioned in this respect. The impact of technology and globalization on inflation remains an issue, in that those two factors are important reasons for the difficulties that central banks face in achieving their mandates, and policy-makers must continue to monitor them. Meanwhile, the coefficient of the foreign output gap improves from the insignificant and negative value of -0.01 to significant and positive value of 0.02. But first, the government banned Twitter, Instagram, Facebook, and WhatsApp in an effort to reduce coordination among protesters and restrain news about the crackdown. He also serves as the Research Director of journalistsresource.org. While millions of students were confined to home and remote instruction, they were divided by their Internet access, their familiarity with computer hardware and software, and their ability to solve their own technology issues (PRB 2020). More than a third of people in Sub-Saharan Africa have the ability to access a mobile phone (Katine 2010). Globalization is a term used to describe how trade and technology have made the world into a more connected and interdependent place. Even so, the country exerts strong control by identifying and prosecuting some violators of the bans, and undertaking more far-reaching tactics. Globalization has had, and continues to have an impact on the organization of work and on the work people do. Starting from 2009:Q1, the domestic output gap steadily decreases, while the foreign output gap fluctuate around the zero-bound value. Elected leader Ang San Suu Kyi was arrested, and other top officials were detained or pushed from power. The tenth row is the weak IV refer to weak instrumental variables (IV) test. We show that technology is another important and often overlooked factor that causes low inflation. (4) Figure 3. The study did not find evidence that globalization affects the U.S. domestic inflation rate. The baseline IV set includes lags of inflation and inflation expectations in the regression model, the 12 lagged terms of the domestic and foreign output gap, the technology variable, and the growth rate of M2 in the U.S. [63]. By Gal and Gertler [40], Gal et al. The second to last column shows the variables Variance Inflation Factor (VIF), which tests whether the variables have multicollinearity, and the goodness-of-fit statistic R2 is reported in the last line. In addition, the real variables at the current period in Model (3) are likely to be correlated with the contemporaneous random disturbance variable. However, Perron's research on the selection of structural mutation points is based on prior knowledge and data mining of variable sequences. Meanwhile, Dewett and Jones's [53] review paper made a detailed review on the information technology (IT) including 37 papers within the last five years that have been published in six leading management journals. As shown by the spring 2011 uprisings throughout the Arab world, technology really does offer a window into the news of the world. The result of the ZA unit root test for model (3) is shown in Table 1. Impact of Technology on Globalization. As can be seen from the figure, before 2010, there was a negative correlation between core inflation and the unemployment rate basically, which means that a lower core inflation is accompanied with a higher unemployment rate, agreeing with the Phillips curve theory. Can we allow one or more of those activities, while restricting the rest? The foreign output gap in 2002 and 2009 coincides exactly with the lowest point of the core inflation rate in these periods, and the crest point is also in line with the peak of core inflation in 2008 and 2012. Political globalization refers to how the events in one nation affects events in other. For example, people in the United States saw internet updates of Egyptian events in real time, with people tweeting, posting, and blogging on the ground in Tahrir Square. These Twitter updatesa revolution in real timeshow the role social media can play on the political stage. Inflation is measured using the personal consumption expenditures (PCE) excluding food and energy (chain-type price index). Phone giant Nokia points out that there are 4 billion mobile phone users worldwidethats more than twice as many people as have bank accountsmeaning there is an opportunity to connect banking companies with people who need their services (ITU Telecom 2009). For the pre-2008 period, when the technology is not considered, the coefficient of domestic output gap is not significant, regardless of whether considering the globalization variable. Washington, DC: The National Academies Press. From an empirical perspective, there are some doubts about the NKPC. In the new Keynesian framework, those factors specifically include inflation expectations. What information is accessible to these patrons of an internet caf in China? He represents Brazil, Colombia, Dominican Republic, Ecuador, Haiti, Panama, Philippines, Suriname, and Trinidad & Tobago. Industries are defined according to the 2007 North American Industry Classification System. At the same time, according to the standard macroeconomic analysis framework (such as Stock & Watson [62]), random factors affecting the spot inflation rate are also likely to affect the immediate output gap (both domestic and foreign). Introduction 2. As we move into 2021, the latest data paint a clearer and . How have you noticed technology use and opportunity to be linked, or does your experience contradict this idea? Technological globalization is one of 8 types of globalization that helps us describe what globalization looks and feels like in 21st Century information societies.. Available from: https://www.bls.gov/home.htm. Similarly, more and more free digital products (such as applications and online travel bookings) are neither well-captured in nominal gross domestic product (GDP) nor recorded in the CPI [30]. Is it owned by a large conglomerate (you can do a web search and find out!)? We estimate the model using Generalized Method of Moments (GMM). The report recognized that rural and low-tech products such as corn can benefit from new technological innovations, and that, conversely, technologies like mobile banking can aid those whose rural existence consists of low-tech market vending. For example, the rigid structure of some economies may hinder the response of the pricing process to globalization. The break date statistics do not provide a uniform break point. The rationality of instrumental variable selection is further determined by Hansen's J test [64], which assumes that all instrumental variables are exogenous, and if the null hypothesis is not rejected, the choice of instrumental variables is relatively reasonable. The rate of technology inputs in the production process is gradually accelerating [9]. The weighted average of the output gaps of the major trading partners of the countries studied is used as the countrys foreign output gap. Immediately, citizens launched widespread and persistent protests against the coup. The term globalization describes the increased mobility of goods, services, labor, technology and capital throughout the world. Table 4 reports the results for the first sensitivity study. Another aspect of thedigital divideis present in the type of community one lives in. Therefore, we have added the results of Hansens J-test with the original hypothesis that all instrumental variables are exogenous and the weak instrumental variables test of [66]. Technological globalization refers to the cross-cultural development and exchange of technology. Combining the dummy tests and real economic facts, we choose the structural break point in 2008:Q2 in this paper, while another possible break points (2006:Q1 and 2011:Q3) will be examined in the robustness analysis. Data Availability: All relevant data are open available from the following URLs. PLoS ONE 14(4): Survey forecasts of inflation are taken from the Survey of Professional Forecasters. Advancements in technology have considerably facilitated globalization. Thus, the technology variable is . This shows that the technology variable plays an important role in model stability during the whole sample period and also has a larger point estimate. - 18889872. charoid999 . The regression results also support the baseline conclusions. The results show that the globalization factor has a positive effect on U.S. inflation, but only at the 10% significance level. They conclude indicate that integration in the global economy is in fact important, but globalization has not yet induced changes in openness large enough to justify significant brakes in inflation dynamics. Global inter-organizational networks 5. Autor et al. As technology continues to improve, the relative price of technology continues to decline. cultural globalization, phenomenon by which the experience of everyday life, as influenced by the diffusion of commodities and ideas, reflects a standardization of cultural expressions around the world. Globalization results in the expansion of international cultural, economic, and political activities. Zhang et al. The linear unit root test method implies an assumption that the data generation process (DGP) has no structural breaks. Calza [19] also comes to similar conclusions when testing whether the proposition that globalization has led to greater sensitivity of domestic inflation to the global output gap holds for the euro area. Whether well intentioned or not, the vision of a continent of Africans successfully chatting on their iPhone may not be ideal. Economics. But approximately one in four Black and Hispanic people reported being smartphone-only Internet users, a number that far outpaces White peoples reliance on the devices. Technology affects inflation by creating productivity improvements through the substitution of labor by, for example, automation. cultures, and population that is brought about by cross-border trade in goods, services, technology etc. In Brazil, in the year 2003, he was State Secretary for International Affairs at the Ministry of Finance. However, most experts agree that the COVID-19 pandemic revealed that thedigital dividehas persisted, particularly in education. Myanmars military took immediate steps to quell the protests, including firing at and killing dozens of protesters and storming colleges and hospitals. Listen to Dr. Tom Patterson, Bradlee Professor of Government and Press at Harvard Kennedy Schools Shorenstein Center on Media, Politics and Public Policy. , , are the coefficients of domestic output gap, foreign output gap, drag of technology variables that take into account the dummy variables. Technology affects prices via sectoral innovation and unit labor costs [26]. Groups (1), (2) and (3) provide the estimation results when foreign output gap and technology, foreign and technology are dropped from the hybrid NKPC model. Blix [31] show that the rapid growth of e-commerce is another way by which digitalization can increase competitiveness and influence inflation. Some schools sport cutting-edge computer labs, while others sport barbed wire. The information presented in Fig 2 suggests that globalization and technological factors may be important factors that cannot be ignored in the study of the dynamics of core inflation in the United States. Knowledge, technology, and growth in long-term perspective 2.1 Long-term trends One of the best ways to see the role of knowledge in development . Xt are the control variable, other factors that affect inflation. It notices that except for foreign output gap and technical drag variables in 2008, the three variables have the same significance at the 1% level in all break points sample period. If the foreign and technology economic slack does not exert any influence on the sensitivity of inflation to the domestic output gap, the coefficient estimates on the domestic output gap in models both with and without foreign output gap and the technology variable should be similar. Social media companies replied in what ways they could, such as deactivating the accounts of Myanmars military so that they couldnt share their own messages. As the names suggest, media globalization is the worldwide integration of media (all print, digital, and electronic means of communication) through the cross-cultural exchange of ideas. As for the contribution of technology price to price increases in various industries, the weights of technical inputs are calculated using the prices in each year, (quarterly observations within one year use the same weight of the year). In general, the report found that technological progress and economic growth rates were linked, and that the rise in technological progress helped improve the situations of many living in extreme poverty (World Bank 2008). They estimate that the weighted average foreign output gap has a significant positive effect on domestic inflation, and it has shown an upward trend year by year. Data from the Pew Research Center (Perrin 2019) suggests the emergence of yet anotherdivide. Chinas slowdown, demographics, globalization, and transitory factors are commonly cited reasons for the common low inflation phenomenon. For the breakpoint of 2006: Q1, the coefficient of the foreign output gap is negative and insignificant at the post-2006 period, whereas it is significant (0.02) at the 5% significance level post-2008. Moores Law is the observation that the number of transistors in a dense integrated circuit doubles about every two years. This shows that the impact of technological innovation on U.S. inflation has slightly increased after 2008. Yingying Xu, Affiliation: It is assumed that the structure mutation point is known (exogenous), which may lead to the unit root test on the null hypothesis excessive rejection. Since the structural break tests with unknown points fail to identify a clear break point for the underlying model, we need to produce additional empirical evidence based on a more comprehensive set of formal parameter constancy tests in support of the identified break points. where t is a random disturbance term with independent consistency distribution characteristics. (2016, August 10). Regarding whether globalization elements should be included within the scope of domestic inflation drivers, the debate in academic circles has been fierce in recent years, and existing research is far from consensus. Vocabulary. As a whole, thedigital dividebrings some level of controversy. To what extent is technology becoming a cultural universal? The inflation rate in the U.S. has been running low for a long time. Did you have an idea for improving this content? According to [66], validity testing of instrumental variables includes correlation testing and exogenous testing. https://www.federalreserve.gov/econresdata/notes/feds-notes/2015/low-inflation-in-the-united-states-a-summary-of-recent-research-20151123.html, https://www.federalreserve.gov/newsevents/speech/powell20180824a.htm, www.federalreserve.gov/monetarypolicy/files/FOMC_LongerRunGoals.pdf, https://www.federalreserve.gov/boarddocs/speeches/2005/20050310/default.htm, https://advisors.vanguard.com/VGApp/iip/site/advisor/researchcommentary/article/IWE_InvResWhyIsInflationLow, https://www.federalreserve.gov/newsevents/speech/yellen20170926a.htm, Corrections, Expressions of Concern, and Retractions.
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