This paper analyzes the dynamic asymmetric effects of digitization on domestic inflation for a sample of 54 advanced economies (AEs) and emerging markets (EMs) over the period 2004–2018. Using Katz and Calorda’s Digital Ecosystem Development Index and employing the system Generalized Method of Moments (GMM) estimation methodology, the results of the paper reveal that the improvement in digitization has a statistically significant nonlinear deflationary effect with an exact threshold level of 43.22 points, that is, that the marginal effect of the digital penetration is larger when its level is lower than the threshold level. For EMs, with a level of digitization below the average of our full sample, policymakers must continue to invest in and expand on their digital ecosystem until the threshold level is achieved. Our results show that investment in human capital and improvement in governance can reinforce these deflationary effects. Hence, to obtain the maximum positive impact of increasing digitization on domestic inflation, EM governments should focus on maximizing school enrollment, controlling corruption, establishing rule of law, protecting the right to freedom of opinion and expression, and implementing accountability measures.

中文翻译：

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数字化对新兴市场通胀的不对称门槛效应

本文分析了 2004 年至 2018 年期间数字化对 54 个发达经济体 (AE) 和新兴市场 (EM) 的国内通胀的动态不对称影响。利用Katz和Calorda的数字生态系统发展指数并采用系统广义矩量法（GMM）估计方法，论文的结果表明，数字化的改善具有统计上显着的非线性通货紧缩效应，其精确阈值水平为43.22点，即也就是说，当数字渗透率低于阈值水平时，其边际效应更大。对于新兴市场来说，数字化水平低于我们全部样本的平均水平，政策制定者必须继续投资并扩展其数字生态系统，直到达到阈值水平。我们的研究结果表明，人力资本投资和治理改善可以强化这些通货紧缩效应。因此，为了获得日益数字化对国内通胀的最大积极影响，新兴市场政府应重点关注最大限度提高入学率、控制腐败、建立法治、保护见解和言论自由权以及实施问责措施。