in times of economic slack. 10 conclusion to sum up, the current low unemployment rate and the recent wage increases do not necessarily imply that higher inflation is around the corner. first, measuring economic slack is fraught with well - known difficulties. second, both theory and empirical studies suggest that the wage - inflation pass - through varies over time and depends on many factors. arguably, the structural changes under way in advanced economies imply that the pass - through may be on the decline. the bottom line is that monetary policy decisions need to be based on a wide array of economic indicators, not just the unemployment rate and wages. i have touched upon some of the economic effects of the it revolution. while there might be dangers ahead, i have no doubt that, with appropriate regulation, this revolution will contribute to growth and prosperity in europe and the world. it will also change the way we work in central banks. we are actively trying to foster this change. 1 for alternative estimates of the euro area output gap, see research from the european commission and the imf, or jarocinski, m. and lenza, m. ( 2018 ), “ an inflation - predicting measure of the output gap in the euro area ”, journal of money, credit and banking, vol. 50, no 6, pp. 1189 – 1224. 2 see, for example : trainer, d. ( 2016 ). “ how the internet economy killed inflation, ” forbes, 28 september ; and cohen, p. and tankersley, j. ( 2018 ), “ e - commerce might help solve the mystery of low inflation ”, the new york times, 11 june. 3 cavallo, a. ( 2018 ), “ more amazon effects : online price competition and pricing behaviors ”, paper presented at the 2018 jackson hole economic policy symposium. 4 aghion, p., beragaud, a., boppart, t., klenow, p and li, h. ( 2019 ), “ a theory of falling growth and rising rents ”, working paper series, federal reserve bank of san francisco. 5 haskel, j. and westlake, s. ( 2017 ), capitalism without capital : the rise of the intangible economy, princeton university press ; corrado, c., haskel, j., jona - lasinio, c. and iommi, m. ( 2012 ), “ intangible capital and growth in advanced economies

term effects, such as : rising market concentration, a falling labour share and slower long - term growth. one of the factors behind these negative effects is that it makes it easier for highly productive “ superstar ” firms to expand into new markets, generating efficiency gains in the short run, but leading to more concentration in the long run. 4 a more general trend leading in the same direction is the rise of intangible inputs, such as brands, software, technologies and databases. investment in these types of input is steadily increasing as a share of overall investment, and they are becoming increasingly important for firms ’ success. 5 the key feature of intangible inputs is that they can be deployed on a larger scale at almost zero additional cost. in other words, they primarily contribute to firms ’ fixed costs. the increase in the role of fixed costs and the diminishing role of variable costs can have important implications for the structure of an industry : these changes contribute to an increase in concentration, a long - term decline in productivity ( after an initial surge ) and a fall in the labour share. 6 the lesson for our discussion is that the rise of intangibles implies that marginal costs ( such as wages ) may be playing a decreasing role in price - setting decisions, thereby leading to a lower wage - inflation pass - through. some theories suggest that the wage - inflation pass - through might also fluctuate depending on the level of inflation. 7 they start from the empirical observation that, at lower levels of inflation, price fluctuations are less persistent. in such an environment, firms are less inclined to match cost increases with price increases. hence, low inflation leads to lower pass - through and a reduction in the expected persistence of cost and price changes. turning to the euro area data, we can observe that the recent decoupling of wages and prices is not unprecedented. we have seen a similar decoupling before, in 1999 - 2000 and in 2005 - 06. formal econometric exercises confirm this observation and suggest that the wage - inflation pass - through is state - dependent. one finding is that the pass - through depends on the type of 2 / 3 bis central bankers'speeches shock hitting the economy : it is stronger for demand shocks, and weaker for supply shocks. 8 another finding that is particularly relevant now and confirms the theories i have just discussed, is that the pass - through is lower in times of low inflation. 9 other research has also found that the pass - through is lower