Robot adoption and inflation dynamics

Research Question

Basso and Rachedi investigate how robot adoption influences inflation dynamics — specifically, whether the surge in automation during the 2000s and 2010s can explain the muted sensitivity of inflation to unemployment (the “flat Phillips curve”) observed in advanced economies prior to the Covid pandemic, and whether the same framework can account for the subsequent resurgence of steep inflation-unemployment co-movement.

Data and Methodology

The empirical analysis uses an annual panel covering 384 U.S. metropolitan statistical areas (MSAs) from 2008 to 2018. The dependent variables are non-tradable goods inflation (log-difference of services prices excluding rents and utilities, from BEA regional price parities) and wage inflation (log-difference of average compensation per job). Robot adoption at the MSA-year level is constructed following Acemoglu and Restrepo (2020a): industry-level robots per employee at the U.S. national level are weighted by industry employment shares in each MSA, yielding an MSA-year robot-per-employee ratio.

Henrique S. Basso | Macro Paper Warehouse

Robot adoption and inflation dynamics

Research Question

Data and Methodology