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Information technologies, embodiment and growth

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Author Info

  • de la Croix, David

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) ; Belgian National Fund for Scientific Research (FNRS))

  • Boucekkine, Raouf

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

Abstract

This paper studies the conditions under which an IT revolution may endogenously occur. To this end, we construct an endogenous growth multisectoral model with a preeminent IT sector. Technological progress is embodied : New softwares can only be run on the most recent generations and hardware. While the new softwares are copyrighted during a fixed period of time, they become public knowledge at a certain point in time, which generates positive externalities in the rest of the economy. First, we find that our model can give rise to multiple steady states due to strategic complementarities. Then we focus on the dynamic response of the economy to adverse shocks on the level of disembodied technological progress. Substitution effects are shown to arise : The labor resources are diverted from the final goods sector to sustain the creation and production of new softwares. During the IT boom, labor productivity's growth slowdowns, the skill premimum rises as well as the value of firms undertaking research. However, the registered IT boom is always transitory and nothing can be said about the long run sustainability of an IT-driven growth regime.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 2001006.

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Length: 32
Date of creation: 01 Aug 2000
Date of revision:
Handle: RePEc:ctl:louvir:2001006

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Keywords: information technology; vintage capital; embodied technological progress; endogenous growth;

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References

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  1. BOUCEKKINE, Raouf & DE LA CROIX, David & VAILAKIS, Yiannis, . "Technological shocks and IT revolutions," CORE Discussion Papers RP -1646, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: US Economic Growth in the Information Age," OECD Economics Department Working Papers 261, OECD Publishing.
  3. Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, vol. 77(2), pages 56-62, May.
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  8. Boucekkine, Raouf & del Rio, Fernando & Licandro, Omar, 2000. "A Schumpeterian Vintage Capital Model: An Attempt at Synthesis," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2000023, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  9. 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.
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Citations

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Cited by:
  1. Mattalia, Claudio, 2013. "Embodied technological change and technological revolution: Which sectors matter?," Journal of Macroeconomics, Elsevier, vol. 37(C), pages 249-264.
  2. Raouf Boucekkine & David de la Croix & Yiannis Vailakis, 2002. "Technological Shocks and IT Revolutions," Recherches économiques de Louvain, De Boeck Université, vol. 68(1), pages 75-89.
  3. Yu. Yatsenko & N. Hritonenko, 2007. "Network economics and optimal replacement of age-structured IT capital," Computational Statistics, Springer, vol. 65(3), pages 483-497, June.
  4. Chatelain, Jean-Bernard & Ralf, Kirsten & Bruno, Amable, 2010. "Patents as Collateral," MPRA Paper 44698, University Library of Munich, Germany.
  5. De, Supriyo, 2014. "Intangible capital and growth in the ‘new economy’: Implications of a multi-sector endogenous growth model," Structural Change and Economic Dynamics, Elsevier, vol. 28(C), pages 25-42.
  6. Mattalia, Claudio, 2012. "Human capital accumulation in R&D-based growth models," Economic Modelling, Elsevier, vol. 29(3), pages 601-609.
  7. Mauro Bambi & Omar Licandro, 2011. "Endogenous Growth and Wave-Like Business Fluctuation," Working Papers 533, Barcelona Graduate School of Economics.
  8. Keiichi Kishi, 2013. "Dynamic analysis of wage inequality and creative destruction," Discussion Papers in Economics and Business 13-20, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).

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