Economists are noticing a so-called "Amazon Effect," in which the actions of dominant corporations may be affecting things like jobs and inflation, according to a recent column in The New York Times.
Economists and leaders of the Federal Reserve have started discussing the potential effects of "monopsony," or the power of huge, consolidated companies, on the economy. They are looking at how increased consolidation within industries may be stifling wage growth and how companies like Amazon, which constantly adjust prices with algorithms, may be causing greater swings in inflation — the "Amazon Effect."
This is a marked change among central bankers, who typically focus on macroeconomic trends. However, increased consolidation in many industries, coupled with slow wage growth and inflation trends, has started to break down the invisible partition between macroeconomics and microeconomics, according to the report.
As researchers continue to pursue this potential connection, it could have implications in the future on how the Federal Reserve sets interest rates and pursues policy changes.
Read more here.
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