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The resurgence of growth in the late 1990s: is information technology the story?

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Author Info
Stephen D. Oliner
Daniel E. Sichel

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Abstract

The performance of the U.S. economy over the past several years has been remarkable, including a rebound in labor productivity growth after nearly a quarter century of sluggish gains. To assess the role of information technology in the recent rebound, this paper re-examines the growth contribution of computers and related inputs with the same neoclassical framework that we have used in earlier work. Our results indicate that the contribution to productivity growth from the use of information technology -- including computer hardware, software, and communication equipment -- surged in the second half of the 1990s. In addition, technological advance in the production of computers appears to have contributed importantly to the speed-up in productivity growth. All in all, we estimate that the use of information technology and the production of computers accounted for about two-thirds of the 1 percentage point step-up in productivity growth between the first and second halves of the decade. Thus, to answer the question posed in the title of this paper, information technology largely is the story.

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Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series Finance and Economics Discussion Series with number 2000-20.

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Date of creation: 2000
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Handle: RePEc:fip:fedgfe:2000-20

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Keywords: Information technology Computers

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. David, Paul A, 1990. "The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox," American Economic Review, American Economic Association, vol. 80(2), pages 355-61, May. [Downloadable!] (restricted)
  2. Jeremy Greenwood & Boyan Jovanovic, 1998. "Accounting for Growth," NBER Working Papers 6647, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Stiroh, Kevin J, 1998. "Computers, Productivity, and Input Substitution," Economic Inquiry, Oxford University Press, vol. 36(2), pages 175-91, April.
  4. Karl Whelan, 2000. "Computers, obsolescence, and productivity," Finance and Economics Discussion Series 2000-06, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
    Other versions:
  5. Fischer, Stanley, 1988. "Symposium on the Slowdown in Productivity Growth," Journal of Economic Perspectives, American Economic Association, vol. 2(4), pages 3-7, Fall. [Downloadable!] (restricted)
  6. Hulten, Charles R, 1978. "Growth Accounting with Intermediate Inputs," Review of Economic Studies, Blackwell Publishing, vol. 45(3), pages 511-18, October. [Downloadable!] (restricted)
  7. Stephen D. Oliner & Daniel E. Sichel, 1994. "Computers and Output Growth Revisited: How Big Is the Puzzle?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1994-2), pages 273-334. [Downloadable!]
  8. Andreas Hornstein, 1999. "Growth accounting with technological revolutions," Economic Quarterly, Federal Reserve Bank of Richmond, issue Sum, pages 1-22. [Downloadable!]
  9. Michael Smith & Erik Brynjolfsson, 1999. "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Computing in Economics and Finance 1999 1022, Society for Computational Economics.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Nicholas Oulton, 2004. "A Statistical Framework for the Analysis of Productivity and Sustainable Development," CEP Discussion Papers dp0629, Centre for Economic Performance, LSE. [Downloadable!]
  2. Barbara K Atrostic & John Gates & Ron Jarmin, 2000. "Measuring the Electronic Economy: Current Status and Next Steps," Working Papers 00-10, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
  3. Freebairn, J., 2001. "Some Market Effects of E-Commerce," Department of Economics - Working Papers Series 789, The University of Melbourne. [Downloadable!]
  4. Andrea Bassanini & Stefano Scarpetta & Ignazio Visco, 2000. "Knowledge technology and economic growth: recent evidence from OECD countries," Research series 200005-2, National Bank of Belgium. [Downloadable!]
    Other versions:
  5. Marcin Piatkowski, 2004. "Does ICT Investment Matter for Growth and Labor Productivity in Transition Economies?," Development and Comp Systems 0402008, EconWPA. [Downloadable!]
  6. Jan Marc Berk, 2002. "New Economy, Old Central Banks?," Tinbergen Institute Discussion Papers 02-087/2, Tinbergen Institute, revised 01 Aug 2002. [Downloadable!]
    Other versions:
  7. Rakesh Basant & Simon Commander & Rupert Harrison & Naercio Menezes-Filho, 2006. "ICT Adoption and Productivity in Developing Countries: New Firm Level Evidence from Brazil and India," IZA Discussion Papers 2294, Institute for the Study of Labor (IZA). [Downloadable!]
  8. Bart Hobijn, 2001. "Is equipment price deflation a statistical artifact?," Staff Reports 139, Federal Reserve Bank of New York. [Downloadable!]
  9. David Lucking-Reiley & Daniel F. Spulber, 2000. "Business-to-Business Electronic Commerce," Working Papers 0016, Department of Economics, Vanderbilt University. [Downloadable!]
    Other versions:
  10. Harchaoui, Tarek & Tarkhani, Faouzi, 2004. "Whatever Happened to Canada-United States Economic Growth and Productivity Performance in the Information Age?," Economic Analysis (EA) Research Paper Series 2004025e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
  11. Kevin J. Lansing, 2008. "Speculative growth and overreaction to technology shocks," Working Paper Series 2008-08, Federal Reserve Bank of San Francisco. [Downloadable!]
  12. Jakob B Madsen & E Philip Davis, 2003. "Equity Prices, Productivity Growth, And ‘The New Economy’," Public Policy Discussion Papers 03-04, Economics and Finance Section, School of Social Sciences, Brunel University. [Downloadable!]
    Other versions:
  13. Richard Dennis, 2001. "The policy preferences of the U.S. Federal Reserve," Working Papers in Applied Economic Theory 2001-08, Federal Reserve Bank of San Francisco. [Downloadable!]
    Other versions:
  14. Théophile, AZOMAHOU & Raouf, BOUCEKKINE & Phu, NUYEN VAN, 2003. "Energy consumption, technological progress and economic policy," Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Discussion Paper 2003025, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
  15. Rebecca L Driver & Jennifer V Greenslade & Richard G Pierse, . "The role of expectations in estimates of the NAIRU in the United States and the United Kingdom," Bank of England working papers 180, Bank of England. [Downloadable!]
  16. Stephen D. Oliner & Daniel E. Sichel, 2002. "Information technology and productivity: where are we now and where are we going?," Finance and Economics Discussion Series 2002-29, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
    Other versions:
  17. Gu, Wulong & Gera, Surendra, 2004. "The Effect of Organizational Innovation and Information Technology on Firm Performance," The Canadian Economy in Transition 2004007e, Statistics Canada, Micro economic Studies and Analysis Division. [Downloadable!]
  18. Berk, Jan Marc, 2001. "New economy, old central banks? Monetary transmission in a new economic environment," Serie Research Memoranda 0032, Free University Amsterdam, Faculty of Economics, Business Administration and Econometrics. [Downloadable!]
  19. Chee Kong Wong, 2004. "Information Technology, Productivity and Economic Growth in China," Economics Discussion / Working Papers 04-21, The University of Western Australia, Department of Economics. [Downloadable!]
  20. John M. Roberts, 2001. "Estimates of the productivity trend using time-varying parameter techniques," Finance and Economics Discussion Series 2001-08, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  21. Milton Marquis & Bharat Trehan, 2005. "On using relative prices to measure capital-specific technological progress," Working Paper Series 2005-02, Federal Reserve Bank of San Francisco. [Downloadable!]
  22. David G. Mayes & Matti Virén, 2004. "Asymmetries in the Euro area economy," Macroeconomics 0404024, EconWPA. [Downloadable!]
    Other versions:
  23. Patrick Francois & Joanne Roberts, 2000. "Contracting Productivity Growth," Working Papers jorob-99-02, University of Toronto, Department of Economics. [Downloadable!]
    Other versions:
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