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Mr. Andrew Berg, Lahcen Bounader, Nikolay Gueorguiev, Hiroaki Miyamoto, Mr. Kenji Moriyama, Ryota Nakatani, and Luis-Felipe Zanna
Many studies predict massive job losses and real wage decline as a result of the ongoing widespread automation of production, a trend that may be further aggravated by the COVID-19 crisis. Yet automation is also expected to raise productivity and output. How can we share the gains from automation more widely, for the benefit of all? And what are the attendant equity-efficiency trade-offs? We analyze this issue by considering the effects of fiscal policies that seek to redistribute the gains from automation and address income inequality. We use a dynamic general equilibrium model with monopolistic competition, including a novel specification linking corporate power to automation. While fiscal policy cannot eliminate the classic equity-efficiency trade-offs, it can help improve them, reducing inequality at small or no loss of output. This is particularly so when policy takes advantage of novel, less distortive transmission channels of fiscal policy created by the empirically observed link between corporate market power and automation.
Mr. Andrew Berg, Lahcen Bounader, Nikolay Gueorguiev, Hiroaki Miyamoto, Mr. Kenji Moriyama, Ryota Nakatani, and Luis-Felipe Zanna

Income (EDEI) D. Social Welfare Based on Utility Function VI. ENDOGENOUS MARK-UP—AN ILLUSTRATIVE EXAMPLE A. Relationship Between Automation and Price Mark-up B. Impact of Endogenous Mark-up on Production Efficiency: Two Additional Transmission Channels C. Welfare Implications of the Endogenous Mark-up VII. SENSITIVITY ANALYSIS VIII. SUMMARY OF THE RESULTS AND POLICY IMPLICATIONS REFERENCES FIGURES 1. Growth Accounting: Baseline 2. Disposable Income Decomposition: Baseline 3. Raising Tax on Capital Income 4. Wealth Tax 5. Consumption Tax 6

Mr. Andrew Berg, Lahcen Bounader, Nikolay Gueorguiev, Hiroaki Miyamoto, Mr. Kenji Moriyama, Ryota Nakatani, and Luis-Felipe Zanna

second order, because the distortion is modified by the marginal conditions of robots, skilled labor, and unskilled labor as the robot density is defined by these three factor inputs (the mark-up tax is irrelevant for the marginal condition for traditional capital). C. Welfare Implications of the Endogenous Mark-up The endogenous mark-up, according to the first two criteria (output vs. inequality, and disposable income of the two types of workers), shortens the list of “admissible” policy packages . The benefits the robot and mark-up taxes generate by

Mr. Olivier Coibion, Mr. Yuriy Gorodnichenko, and Mr. Gee Hee Hong
We study the cyclical properties of sales, regular price changes and average prices paid by consumers ("effective" prices) in a dataset containing prices and quantities sold for numerous retailers across a variety of U.S. metropolitan areas. Both the frequency and size of sales fall when local unemployment rates rise and yet the inflation rate for effective prices paid by consumers declines significantly with higher unemployment. This discrepancy can be reconciled by consumers reallocating their expenditures across retailers, a feature of the data which we document and quantify. We propose a simple model with household shopping effort and store-switching consistent with these stylized facts and document its implications for business cycles and policymakers.