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Information technology and productivity: where are we now and where are we going?

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  • Oliner, Stephen D.
  • Sichel, Daniel E.

Abstract

Productivity growth in the U.S. economy jumped during the second half of the 1990s, a resurgence that many analysts linked to information technology (IT). However, shortly after this consensus emerged, demand for IT products fell sharply, leading to a lively debate about the connection between IT and productivity and about the sustainability of the faster growth. We contribute to this debate in two ways. First, to assess the robustness of the earlier evidence, we extend the growth-accounting results in Oliner and Sichel (2000a) through 2001. The new results confirm the basic story in our earlier work -- that the acceleration in labor productivity after 1995 was driven largely by the greater use of IT capital goods and by the more rapid efficiency gains in the production of IT goods. Second, to assess whether the pickup in productivity growth is sustainable, we analyze the steady-state properties of a multi-sector growth model. This exercise generates a range for labor productivity growth of 2 percent to 2-3/4 percent per year, which suggests that much -- and possibly all -- of the resurgence is sustainable.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Policy Modeling.

Volume (Year): 25 (2003)
Issue (Month): 5 (July)
Pages: 477-503

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Handle: RePEc:eee:jpolmo:v:25:y:2003:i:5:p:477-503

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Web page: http://www.elsevier.com/locate/inca/505735

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  1. Ho, Mun & Jorgenson, Dale & Stiroh, Kevin, 2002. "Projecting Productivity Growth: Lessons from the U.S. Growth Resurgence," Discussion Papers dp-02-42, Resources For the Future.
  2. Kiley, Michael T., 2001. "Computers and growth with frictions: aggregate and disaggregate evidence," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 55(1), pages 171-215, December.
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  4. Karl Whelan, 2001. "A two-sector approach to modeling U.S. NIPA data," Finance and Economics Discussion Series 2001-04, Board of Governors of the Federal Reserve System (U.S.).
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  7. Gordon, Robert J, 2000. "Does the 'New Economy' Measure up to the Great Inventions of the Past?," CEPR Discussion Papers 2607, C.E.P.R. Discussion Papers.
  8. Karl Whelan, 2000. "Computers, obsolescence, and productivity," Finance and Economics Discussion Series 2000-06, Board of Governors of the Federal Reserve System (U.S.).
  9. Ana Aizcorbe, 2002. "Why are semiconductor prices falling so fast? Industry estimates and implications for productivity measurement," Finance and Economics Discussion Series 2002-20, Board of Governors of the Federal Reserve System (U.S.).
  10. Stephen D. Oliner & Daniel E. Sichel, 2000. "The resurgence of growth in the late 1990s: is information technology the story?," Proceedings, Federal Reserve Bank of San Francisco.
  11. Gordon, Robert J, 2002. "Technology and Economic Performance in the American Economy," CEPR Discussion Papers 3213, C.E.P.R. Discussion Papers.
  12. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: U.S. Economic Growth in the Information Age," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(1), pages 125-236.
  13. Daniel Aaronson & Daniel Sullivan, 2001. "Growth in worker quality," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q IV, pages 53-74.
  14. Erik Brynjolfsson & Lorin M. Hitt, 2000. "Beyond Computation: Information Technology, Organizational Transformation and Business Performance," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 23-48, Fall.
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  16. Karl Whelan, 1999. "Tax incentives, material inputs, and the supply curve for capital equipment," Finance and Economics Discussion Series 1999-21, Board of Governors of the Federal Reserve System (U.S.).
  17. Charles Steindel & Kevin Stiroh, 2001. "Productivity: what is it and why do we care about it?," Staff Reports 122, Federal Reserve Bank of New York.
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