This SEACEN Policy Brief explores how rapid structural change driven by digitalisation and AI adoption, as illustrated by the spread of generative AI such as ChatGPT, challenges fundamental economic relationships and the management of monetary policy.
Digitalisation is fundamentally reshaping inflation dynamics, contributing to a flatter Phillips curve and the “missing inflation” puzzle. The “Amazon effect” and algorithmic pricing intensify competition, leading to a disinflationary bias. Furthermore, official inflation statistics face measurement challenges, often failing to capture consumer welfare gains derived from free digital services, potentially leading to an overstatement of inflation and an underestimation of real output.