(Bloomberg) -- Don't give up on the robots just yet.
Artificial intelligence and machine learning are not currently driving major pickups in productivity and output, but that doesn't mean they won't, Erik Brynjolfsson at the Massachusetts Institute of Technology and Chad Syverson at the University of Chicago write in a new paper.
That's the lead item in this week's economic research roundup, which also summarizes studies on the dollar's influence on global trade and a look at how the recession scarred trade. Check this column every Tuesday for summaries of new and pertinent studies from around the world.
A hopeful case for AI-driven output
Artificial Intelligence and the Modern Productivity Paradox: A Clash of Expectations and Statistics
Published November 2017
Available on the NBER website
Productivity growth has declined by half over the past decade and inflation-adjusted incomes are stagnating. The trends are confusing in an era marked by technological advancement and the dawn of artificial intelligence, but Brynjolfsson, Syverson and their co-author Daniel Rock argue that this is partly due to a lag effect: AI and machine learning technology capabilities just haven't had time to diffuse widely.
New technologies have historically taken a long time to spread in an economically important way, the authors note. E-commerce didn't become the driving disruptor in the retail industry until years after the dot-com boom, for instance, as infrastructure and customers took time to adjust. Now, leveraging the newest technologies will require investments in human capital and skills and the creation of new processes and business models. “Both the AI investments and the complementary changes are costly, hard to measure, and take time to implement, and this can, at least initially, depress productivity as it is currently measured,” the authors write.
Weekly Demo(graphic)
Employment rates have been moving up across advanced economies in recent years, even as workforces age, recently-released second-quarter data from the OECD show. Here's more on the boom in Japan and in Germany.
The dollar almighty
Global Trade and the Dollar
Published November 2017
Available on the NBER website
A 1 percent rise in the U.S. dollar against all other global currencies predicts a 0.6 percent to 0.8 percent drop in trade volume between countries in the rest of the world over the year. That's the finding of a new paper from Harvard University economist Gita Gopinath and co-authors, which leverages a massive new dataset of bilateral trade prices and volumes and controls for the business cycle. The paper's main point is to challenge the Mundell-Fleming paradigm, which holds that the price of imported goods fluctuates closely with the bilateral exchange rate. In previous work, Gopinath has made the case that the value of a nation's currency relative to the dollar is actually a crucial driver of import prices and quantities, regardless of where the goods come from – in large part because most trade is invoiced in a handful of dominant currencies, and the dollar plays an outsize role. This new paper's results support that dominant currency theory.
A lost generation
International trade collapsed in the years in and after the Great Recession, costing the U.S. a generation of exporters, a new Fed analysis finds. As existing firms shuttered, new entrants into the business slowed dramatically, cutting into the variety of U.S. good sold abroad. Had entry and exit rates stayed near their historical averages, 2014 exports would have been 31 percent above the pre-recession level. Instead, data show they were only 14 percent higher – underlining the extent of the slump. At the same time, the exporters that stayed in business sold in higher volumes, making the contraction less important to the overall quantity of goods sold overseas.
The Great Recession and a Missing Generation of Exporters
Published November 2017
Available on the Federal Reserve website
To contact the editor responsible for this story: David Biller at dbiller1@bloomberg.net, James Mayger
©2017 Bloomberg L.P.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
