IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Was Y2K behind the business investment boom and bust?

Listed author(s):
  • Kevin L. Kliesen

During the latter part of the 1990s, U.S. economic growth was boosted by sizable increases in business purchases of information processing equipment and software, otherwise known as high-tech capital goods. Beginning in 2000, though, firms began to curtail these expenditures; by 2001, high-tech and other forms of business investment were falling sharply. Indeed, much of the downturn in the growth of U.S. economic activity can be traced to the sharp decline in investment spending. Several explanations have been offered, from the acceleration in labor productivity—the so-called “New Economy” story—to the stock market surge and subsequent collapse. One explanation that has not been explored in much detail is the surge in business purchases of hardware and software in preparation for the century date change (Y2K). Because many information processing systems and much of the hardware and software were not Y2K compliant as late as 1998, it was thought that business investment in high-tech equipment and software would increase appreciably to fix this problem. Although solid Y2K spending data are lacking, the evidence presented in this paper indicates that the magnitude and timing of Y2K-related expenditures make it unlikely that the investment boom and bust was a Y2K event.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Article provided by Federal Reserve Bank of St. Louis in its journal Review.

Volume (Year): (2003)
Issue (Month): Jan ()
Pages: 31-42

in new window

Handle: RePEc:fip:fedlrv:y:2003:i:jan:p:31-42:n:v.85no.1
Contact details of provider: Postal:
P.O. Box 442, St. Louis, MO 63166

Fax: (314)444-8753
Web page:

More information through EDIRC

Order Information: Web: Email:

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.:

in new window

  1. Eric French & Thomas H. Klier & David B. Oppedahl, 2002. "Is there still an investment overhang, and if so, should we worry about it?," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue May.
  2. Kevin J. Stiroh & Dale W. Jorgenson, 1999. "Information Technology and Growth," American Economic Review, American Economic Association, vol. 89(2), pages 109-115, May.
  3. 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.).
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:fip:fedlrv:y:2003:i:jan:p:31-42:n:v.85no.1. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kathy Cosgrove)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.