Are Superstar Firms and Amazon Effects Reshaping the Economy?

For example, more of the investment of modern corporations takes the form of intangible capital, like software and patents, rather than machines and other physical goods. That may be a reason low interest rate policies by central banks over the past decade didn’t prompt more capital spending, said Nicolas Crouzet and Janice Eberly of Northwestern University in a paper presented at the conference.

Banks are generally disinclined to treat intellectual property or other intangible items as collateral against loans, which could mean interest rate cuts by a central bank have less power to generate increased investment spending.

Alan Krueger, a Princeton economist, argued that monopsony power is most likely part of the apparent puzzle of why wage growth is low. By his estimates, wages should be rising 1 to 1.5 percentage points faster than they are, given recent inflation levels and the unemployment rate.

When workers have few potential employers to choose from, he said, they may have less ability to demand higher pay, and it becomes easier for employers to collude to restrict pay, whether through explicit back-room deals or more subtle signaling.

But he said monetary policy might have some power to reduce that effect. By keeping interest rates low and allowing the labor market to strengthen, employers may eventually find they have no choice but to increase worker pay. “Allowing the labor market to run hotter than otherwise could possibly cause collusion to break down,” Mr. Krueger said. “If the collusion does wither, wages and employment would rise.”

Another paper, by the Harvard economist Alberto Cavallo, presents evidence that the algorithms used by Amazon and other online retailers, with their constantly adjusting prices, may mean greater fluctuations in overall inflation in the event of swings in currency values or other shocks.

Physical retailers tend to be slow to change prices because of some temporary disturbance, like a spike in the value of the dollar or a fall in gasoline prices. But online retailers are able to reflect changing prices almost instantly.