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It's Not What You Make, It's How You Use IT: Measuring the Welfare Benefits of the IT Revolution Across Countries

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  • Bayoumi, Tamim
  • Haacker, Markus

Abstract

This Paper analyses the welfare benefits from falling relative prices of IT (Information Technology) goods across a wide range of countries. Using two separate methodologies and datasets, we find that welfare benefits mainly accrue to users of IT, not their producers, because of falling relative prices. This is important, as IT production and use are highly differentiated across countries, and implies that earlier work on how IT production affects real GDP, while useful in calibrating the overall benefits of the IT revolution, are a less valuable way of assessing the distribution of benefits.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3555.

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Date of creation: Sep 2002
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Handle: RePEc:cpr:ceprdp:3555

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Keywords: information technology; technological change; terms of trade; welfare benefits;

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References

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  1. 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.
  2. Paul Schreyer, 2000. "The Contribution of Information and Communication Technology to Output Growth: A Study of the G7 Countries," OECD Science, Technology and Industry Working Papers 2000/2, OECD Publishing.
  3. Crafts, Nicholas, 2002. "The Solow Productivity Paradox in Historical Perspective," CEPR Discussion Papers 3142, C.E.P.R. Discussion Papers.
  4. Erik Brynjolfsson & Lorin Hitt, 1997. "Information Technology as a Factor of Production: The Role of Differences Among Firms," Working Paper Series 201, MIT Center for Coordination Science.
  5. Stephen J Nickell & Stephen Redding & Joanna Swaffield, 2002. "Educational attainment, labour market institutions, and the structure of production," LSE Research Online Documents on Economics 3706, London School of Economics and Political Science, LSE Library.
  6. Martin Neil Baily, 2001. "Macroeconomic Implications of the New Economy," Working Paper Series WP01-9, Peterson Institute for International Economics.
  7. Kevin J. Stiroh, 2001. "Information technology and the U.S. productivity revival: what do the industry data say?," Staff Reports 115, Federal Reserve Bank of New York.
  8. 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.
  9. Sue Fernie & Helen Gray, 2002. "Its a Family Affair: the Effect of Union Recognition and Human Resource Management on the Provision of Equal Opportunities in the UK," CEP Discussion Papers dp0525, Centre for Economic Performance, LSE.
  10. Erik Brynjolfsson, 1994. "Some Estimates of the Contribution of Information Technology to Consumer Welfare," Working Paper Series 161, MIT Center for Coordination Science.
  11. Jacques Mairesse & Gilbert Cette & Yussuf Kocoglu, 2000. "Les technologies de l'information et de la communication en France : diffusion et contribution à la croissance," Économie et Statistique, Programme National Persée, vol. 339(1), pages 117-146.
  12. C. Knick Harley, 1998. "Cotton Textile Prices and the Industrial Revolution," Economic History Review, Economic History Society, vol. 51(1), pages 49-83, 02.
  13. Karl Whelan, 2000. "A guide to the use of chain aggregated NIPA data," Finance and Economics Discussion Series 2000-35, Board of Governors of the Federal Reserve System (U.S.).
  14. Bart van Ark, 2001. "The Renewal of the Old Economy: An International Comparative Perspective," OECD Science, Technology and Industry Working Papers 2001/5, OECD Publishing.
  15. Martin Neil Baily, 2001. "Macroeconomic implications of the new economy," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 201-268.
  16. Oulton,Nicholas & O'Mahony,Mary, 1994. "Productivity and Growth," Cambridge Books, Cambridge University Press, number 9780521453455, December.
  17. Martin Brookes & Zaki Wahhaj, 2001. "Is the Internet Better than Electricity?," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 2(2), pages 53-72, April.
  18. Dirk Pilat & Frank C. Lee, 2001. "Productivity Growth in ICT-producing and ICT-using Industries: A Source of Growth Differentials in the OECD?," OECD Science, Technology and Industry Working Papers 2001/4, OECD Publishing.
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Citations

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Cited by:
  1. Elizabeth Brainerd & Nidhiya Menon, 2013. "Seasonal Effects of Water Quality: The Hidden Costs of the Green Revolution to Infant and Child Health in India," Working Papers 64, Brandeis University, Department of Economics and International Businesss School.
  2. Francesco VENTURINI, 2006. "The Long-Run Impact of ICT," Working Papers 254, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  3. Nicholas Crafts, 2004. "Social savings as a measure of the contribution of a new technology to economic growth," Economic History Working Papers 22554, London School of Economics and Political Science, Department of Economic History.
  4. Catherine L. Mann, 2012. "Information Technology Intensity, Diffusion, and Job Creation," Working Papers 46, Brandeis University, Department of Economics and International Businesss School.
  5. Parham, Dean, 2005. "Les gains de productivité au moyen de l’usage des technologies de l’information : l’expérience australienne," L'Actualité Economique, Société Canadienne de Science Economique, vol. 81(1), pages 143-164, Mars-Juin.
  6. Niek Nahuis & Ben Geurts, 2004. "Helping thy neighbour: productivity, welfare and international trade," International Trade 0404008, EconWPA.
  7. Richard Nahuis & Henry van der Wiel, 2005. "How Should Europe's ICT Ambitions look like? An Interpretative Review of the Facts," Working Papers 05-22, Utrecht School of Economics.
  8. Tamim Bayoumi & Hali Edison, 2003. "Is Wealth Increasingly Driving Consuption?," DNB Staff Reports (discontinued) 101, Netherlands Central Bank.
  9. Nicholas Crafts, 2004. "The world economy in the 1990s: a long run perspective," Economic History Working Papers 22334, London School of Economics and Political Science, Department of Economic History.

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