IDEAS home Printed from https://ideas.repec.org/a/wly/canjec/v42y2009i3p844-865.html
   My bibliography  Save this article

Information technology and economic performance in U.S industries

Author

Listed:
  • Elena Ketteni

Abstract

We study the relationship between information technology (IT) and economic performance, to explore whether IT‐capital promotes productivity growth. We use a data set similar to that of previous researchers, but employ non‐parametric estimation techniques in order to directly estimate the output elasticities of IT for each industry and time period. We find that IT has a positive effect on productivity, which varies among industries and time. Moreover, adjustment costs are important when identifying this effect. Finally, IT‐capital growth appears to be raising income in all industries used in our sample, even those that experienced output reduction. L'auteur étudie la relation entre la technologie de l'information (TI) et la performance économique pour établir si le capital‐TI promeut la croissance de la productivité. On utilise des données semblables à celles utilisées par les chercheurs qui se sont occupés de ces questions auparavant, mais on utilise des techniques d'estimation non‐paramétrique pour pouvoir calibrer directement les élasticités des produits par rapport à l'investissement en TI pour chaque industrie et chaque période. On découvre que les TI ont un effet positif sur la productivité, et que cet effet varie selon l'industrie et dans le temps. De plus, les coûts d'ajustement sont importants quand on calibre cet effet. Finalement la croissance du capital‐TI semble augmenter le niveau de revenu dans toutes les industries utilisées dans l'échantillon, même celles qui ont subi une réduction du niveau de la production.

Suggested Citation

  • Elena Ketteni, 2009. "Information technology and economic performance in U.S industries," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(3), pages 844-865, August.
    • Handle: RePEc:wly:canjec:v:42:y:2009:i:3:p:844-865
    DOI: 10.1111/j.1540-5982.2009.01529.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1540-5982.2009.01529.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1540-5982.2009.01529.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Nadiri, M. Ishaq & Prucha, Ingmar R., 1990. "Dynamic factor demand models, productivity measurement, and rates of return: Theory and an empirical application to the US Bell System," Structural Change and Economic Dynamics, Elsevier, vol. 1(2), pages 263-289, December.
    2. Stephen D. Oliner & Daniel E. Sichel, 2000. "The Resurgence of Growth in the Late 1990s: Is Information Technology the Story?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 3-22, Fall.
    3. Ricardo J. Caballero & Eduardo M. R. A. Engel, 1999. "Explaining Investment Dynamics in U.S. Manufacturing: A Generalized (S,s) Approach," Econometrica, Econometric Society, vol. 67(4), pages 783-826, July.
    4. Berndt, Ernst R. & Morrison, Catherine J., 1995. "High-tech capital formation and economic performance in U.S. manufacturing industries An exploratory analysis," Journal of Econometrics, Elsevier, vol. 65(1), pages 9-43, January.
    5. Helpman, Elhanan & Rangel, Antonio, 1999. "Adjusting to a New Technology: Experience and Training," Journal of Economic Growth, Springer, vol. 4(4), pages 359-383, December.
    6. Robert J. Gordon, 2000. "Does the "New Economy" Measure Up to the Great Inventions of the Past?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 49-74, Fall.
    7. T. Stengos & E. Zacharias, 2006. "Intertemporal pricing and price discrimination: a semiparametric hedonic analysis of the personal computer market," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(3), pages 371-386, April.
    8. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 2002. "Information Technology, Workplace Organization, and the Demand for Skilled Labor: Firm-Level Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(1), pages 339-376.
    9. Hyunbae Chun, 2003. "Information Technology and the Demand for Educated Workers: Disentangling the Impacts of Adoption versus Use," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 1-8, February.
    10. M. Ishaq Nadiri & Ingmar Prucha, 2001. "Dynamic Factor Demand Models and Productivity Analysis," NBER Chapters,in: New Developments in Productivity Analysis, pages 103-172 National Bureau of Economic Research, Inc.
    11. Fan, Yanqin & Li, Qi, 1996. "Consistent Model Specification Tests: Omitted Variables and Semiparametric Functional Forms," Econometrica, Econometric Society, vol. 64(4), pages 865-890, July.
    12. David Autor & Lawrence Katz & Alan Krueger, 1997. "Computing Inequality: Have Computers Changed the Labor Market?," Working Papers 756, Princeton University, Department of Economics, Industrial Relations Section..
    13. Dale W. Jorgenson, 2001. "Information Technology and the U.S. Economy," Higher School of Economics Economic Journal Экономический журнал Высшей школы экономики, CyberLeninka;Федеральное государственное автономное образовательное учреждение высшего образования «Национальный исследовательский университет «Высшая школа экономики», vol. 5(1), pages 3-34.
    14. John Haltiwanger & Russell Cooper & Laura Power, 1999. "Machine Replacement and the Business Cycle: Lumps and Bumps," American Economic Review, American Economic Association, vol. 89(4), pages 921-946, September.
    15. James Bessen, 2002. "Technology Adoption Costs and Productivity Growth: The Transition to Information Technology," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(2), pages 443-469, April.
    16. Kalaitzidakis, Pantelis & Mamuneas, Theofanis P. & Savvides, Andreas & Stengos, Thanasis, 2001. "Measures of Human Capital and Nonlinearities in Economic Growth," Journal of Economic Growth, Springer, vol. 6(3), pages 229-254, September.
    17. Kevin J. Stiroh & Dale W. Jorgenson, 1999. "Information Technology and Growth," American Economic Review, American Economic Association, vol. 89(2), pages 109-115, May.
    18. Stiroh, Kevin J, 1998. "Computers, Productivity, and Input Substitution," Economic Inquiry, Western Economic Association International, vol. 36(2), pages 175-191, April.
    19. Donald Siegel, 1997. "The Impact Of Computers On Manufacturing Productivity Growth: A Multiple-Indicators, Multiple-Causes Approach," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 68-78, February.
    20. Hyunbae Chun & Sung-Bae Mun, 2005. "The Structure of Adjustment Costs in Information Technology Investment," Economics Bulletin, AccessEcon, vol. 5(4), pages 1-9.
    21. repec:ebl:ecbull:v:5:y:2005:i:4:p:1-9 is not listed on IDEAS
    22. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U. S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(2), pages 367-397.
    23. Sanghoon Ahn, 1999. "Technology Upgrading with Learning Cost: A Solution for Two ‘Productivity Puzzles'," OECD Economics Department Working Papers 220, OECD Publishing.
    24. 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.
    25. Winford H. Masanjala & Chris Papageorgiou, 2004. "The Solow model with CES technology: nonlinearities and parameter heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(2), pages 171-201.
    26. Igal Hendel, 1999. "Estimating Multiple-Discrete Choice Models: An Application to Computerization Returns," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(2), pages 423-446.
    27. Kevin J. Stiroh, 2002. "Information Technology and the U.S. Productivity Revival: What Do the Industry Data Say?," American Economic Review, American Economic Association, vol. 92(5), pages 1559-1576, December.
    28. Mark E. Doms & Timothy Dunne, 1998. "Capital Adjustment Patterns in Manufacturing Plants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(2), pages 409-429, April.
    29. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
    30. repec:umd:umdeco:prucha3 is not listed on IDEAS
    31. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1998. "Computing Inequality: Have Computers Changed the Labor Market?," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1169-1213.
    32. Adonis Yatchew, 1998. "Nonparametric Regression Techniques in Economics," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 669-721, June.
    33. repec:fth:prinin:377 is not listed on IDEAS
    34. Robert E. Hall, 2004. "Measuring Factor Adjustment Costs," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(3), pages 899-927.
    35. Morrison, Catherine J, 1992. "Unraveling the Productivity Growth Slowdown in the United States, Canada and Japan: The Effects of Subequilibrium, Scale Economies and Markups," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 381-393, August.
    36. Robert E. Lucas & Jr., 1967. "Adjustment Costs and the Theory of Supply," Journal of Political Economy, University of Chicago Press, vol. 75, pages 321-321.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ketteni, Elena & Kottaridi, Constantina, 2019. "The impact of regulations on the FDI-growth nexus within the institution-based view: A nonlinear specification with varying coefficients," International Business Review, Elsevier, vol. 28(3), pages 415-427.
    2. Guangwei Rui & Menggang Li, 2023. "Research on the Impact of the Input Level of Digital Economics in Chinese Manufacturing on the Embedded Position of the GVC," Sustainability, MDPI, vol. 15(16), pages 1-26, August.
    3. Yan Wang & Ping Han, 2023. "Digital Transformation, Service-Oriented Manufacturing, and Total Factor Productivity: Evidence from A-Share Listed Companies in China," Sustainability, MDPI, vol. 15(13), pages 1-24, June.
    4. Elena Ketteni & Theofanis Mamuneas & Panos Pashardes, 2013. "ICT and Energy Use: Patterns of Substitutability and Complementarity in Production," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 7(1), pages 63-86, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ketteni, Elena & Mamuneas, Theofanis & Stengos, Thanasis, 2011. "The Effect Of Information Technology And Human Capital On Economic Growth," Macroeconomic Dynamics, Cambridge University Press, vol. 15(5), pages 595-615, November.
    2. Elena Ketteni & Theofanis Mamuneas & Panos Pashardes, 2013. "ICT and Energy Use: Patterns of Substitutability and Complementarity in Production," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 7(1), pages 63-86, June.
    3. Ketteni, Elena & Mamuneas, Theofanis P. & Stengos, Thanasis, 2007. "Nonlinearities in economic growth: A semiparametric approach applied to information technology data," Journal of Macroeconomics, Elsevier, vol. 29(3), pages 555-568, September.
    4. 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.
    5. Gunnarsson, Gudmundur & Mellander, Erik & Savvidou, Eleni, 2004. "Human capital is the key to the IT productivity paradox," Working Paper Series 2004:13, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    6. Khayyat, Nabaz T. & Lee, Jongsu & Lee, Jeong-Dong, 2014. "How ICT Investment Influences Energy Demand in South Korea and Japan?," MPRA Paper 55454, University Library of Munich, Germany.
    7. Federico Biagi, 2013. "ICT and Productivity: A Review of the Literature," JRC Working Papers on Digital Economy 2013-09, Joint Research Centre.
    8. Sang-Yong Tom Lee & Xiao Jia Guo, 2004. "Information and Communications Technology (ICT) and Spillover: A Panel Analysis," Econometric Society 2004 Far Eastern Meetings 722, Econometric Society.
    9. Hyunbae Chun & Sung‐Bae Mun, 2006. "Substitutability and Accumulation of Information Technology Capital in U.S. Industries," Southern Economic Journal, John Wiley & Sons, vol. 72(4), pages 1002-1015, April.
    10. repec:pri:cepsud:113krusell is not listed on IDEAS
    11. Mellander, Erik & Savvidiou, Eleni & Gunnarsson, Gudmundur, 2001. "Is Human Capital the Key to the IT Productivity Paradox?," Working Paper Series 551, Research Institute of Industrial Economics.
    12. Atzeni, Gianfranco E. & Carboni, Oliviero A., 2006. "ICT productivity and firm propensity to innovative investment: Evidence from Italian microdata," Information Economics and Policy, Elsevier, vol. 18(2), pages 139-156, June.
    13. Ahn, Sanghoon, 2003. "Technology Upgrading with Learning Cost," CEI Working Paper Series 2003-21, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    14. Oliner, Stephen D. & Sichel, Daniel E. & Stiroh, Kevin J., 2008. "Explaining a productive decade," Journal of Policy Modeling, Elsevier, vol. 30(4), pages 633-673.
    15. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
    16. Adriaan Zon & Roberto Antonietti, 2016. "Education and training in a model of endogenous growth with creative wear-and-tear," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 33(1), pages 35-62, April.
    17. Gianfranco E. Atzeni & OA Carboni, 2004. "ICT productivity and firm propensity to innovative investment: learning effect evidence from italian micro data," Working Paper CRENoS 200414, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    18. Erik Brynjolfsson & Lorin M. Hitt, 2003. "Computing Productivity: Firm-Level Evidence," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 793-808, November.
    19. Timothy Dunne & John Haltiwanger & Lucia Foster, 2000. "Wage and Productivity Dispersion in U.S. Manufacturing: The Role of Computer Investment," NBER Working Papers 7465, National Bureau of Economic Research, Inc.
    20. Kevin J. Stiroh, 2002. "Information Technology and the U.S. Productivity Revival: What Do the Industry Data Say?," American Economic Review, American Economic Association, vol. 92(5), pages 1559-1576, December.
    21. Borghans, Lex & ter Weel, Bas, 2007. "The diffusion of computers and the distribution of wages," European Economic Review, Elsevier, vol. 51(3), pages 715-748, April.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:canjec:v:42:y:2009:i:3:p:844-865. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1111/(ISSN)1540-5982 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.