IDEAS home Printed from https://ideas.repec.org/p/anc/wpaper/254.html
   My bibliography  Save this paper

The Long-Run Impact of ICT

Author

Listed:
  • Francesco VENTURINI

    () (Universita' Politecnica delle Marche, Dipartimento di Economia)

Abstract

Using some new techniques of panel cointegration analysis, this paper describes the long-run impact of digital capital on the aggregate performance of the US and EU-15 member countries. ICT is found to significantly impact on output levels without substantial cross-country variation when one adopts the dynamic extension of panel OLS (PDOLS). In this case, however, the long-run elasticity of factor inputs does not differ from the one estimated in the short-run. The time-series version of seemingly unrelated regression (DSUR) provides more plausible findings, showing a significant cross-countries heterogeneity. The effect of ICT on growth appears relevant - and higher than emerging from short-differences - for most economies but not for the EU largest countries.

Suggested Citation

  • Francesco VENTURINI, 2006. "The Long-Run Impact of ICT," Working Papers 254, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  • Handle: RePEc:anc:wpaper:254
    as

    Download full text from publisher

    File URL: http://docs.dises.univpm.it/web/quaderni/pdf/254.pdf
    File Function: First version, 2006
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Breitung, Jörg & Pesaran, Mohammad Hashem, 2005. "Unit roots and cointegration in panels," Discussion Paper Series 1: Economic Studies 2005,42, Deutsche Bundesbank.
    2. Karl Aiginger & Martin Falk, 2005. "Explaining Differences in Economic Growth among OECD Countries," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(1), pages 19-43, March.
    3. Suzanne McCoskey & Chihwa Kao, 1998. "A residual-based test of the null of cointegration in panel data," Econometric Reviews, Taylor & Francis Journals, vol. 17(1), pages 57-84.
    4. Michael McMahon & Gabriel Sterne & Jamie Thompson, 2005. "The role of ICT in the global investment cycle," Bank of England working papers 257, Bank of England.
    5. Dominique Guellec & Bruno Van Pottelsberghe de la Potterie, 2004. "From R&D to Productivity Growth: Do the Institutional Settings and the Source of Funds of R&D Matter?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 66(3), pages 353-378, July.
    6. Mohitosh Kejriwal & Pierre Perron, 2006. "Data Dependent Rules for the Selection of the Number of Leads and Lags in the Dynamic OLS Cointegrating Regression," Boston University - Department of Economics - Working Papers Series WP2006-035, Boston University - Department of Economics.
    7. Gholami, Roghieh & Lee, Sang-Yong Tom & Heshmati, Almas, 2005. "The Causal Relationship between ICT and FDI," WIDER Working Paper Series 026, World Institute for Development Economic Research (UNU-WIDER).
    8. Leonardo Becchetti & Fabrizio Adriani, 2005. "Does the digital divide matter? The role of information and communication technology in cross-country level and growth estimates," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 14(6), pages 435-453.
    9. Bayoumi, Tamim & Haacker, Markus, 2002. "It's Not What You Make, It's How You Use IT: Measuring the Welfare Benefits of the IT Revolution Across Countries," CEPR Discussion Papers 3555, C.E.P.R. Discussion Papers.
    10. Stock, James H & Watson, Mark W, 1993. "A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems," Econometrica, Econometric Society, vol. 61(4), pages 783-820, July.
    11. Francesco Caselli & Wilbur John Coleman, 2001. "Cross-Country Technology Diffusion: The Case of Computers," American Economic Review, American Economic Association, vol. 91(2), pages 328-335, May.
    12. Dale W. Jorgenson & Khuong Vu, 2005. "Information Technology and the World Economy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(4), pages 631-650, December.
    13. Jorgenson, Dale W. & Ho, Mun S. & Stiroh, Kevin J., 2003. "Lessons from the US growth resurgence," Journal of Policy Modeling, Elsevier, vol. 25(5), pages 453-470, July.
    14. Coakley, Jerry & Kellard, Neil & Snaith, Stuart, 2005. "The PPP debate: Price matters!," Economics Letters, Elsevier, vol. 88(2), pages 209-213, August.
    15. Jalava Jukka & Pohjola Matti & Ripatti Antti & Vilmunen Jouko, 2006. "Biased Technical Change and Capital-Labour Substitution in Finland, 1902-2003," The B.E. Journal of Macroeconomics, De Gruyter, vol. 6(1), pages 1-20, April.
    16. Barro, Robert J & Lee, Jong-Wha, 2001. "International Data on Educational Attainment: Updates and Implications," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 541-563, July.
    17. Focco Vijselaar & Ronald Albers, 2004. "New technologies and productivity growth in the euro area," Empirical Economics, Springer, vol. 29(3), pages 621-646, September.
    18. Francesco Daveri & Andrea Mascotto, 2006. "The It Revolution Across The United States," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(4), pages 569-602, December.
    19. Andrea Bassanini & Stefano Scarpetta, 2002. "Growth, Technological Change, and ICT Diffusion: Recent Evidence from OECD Countries," Oxford Review of Economic Policy, Oxford University Press, vol. 18(3), pages 324-344.
    20. 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.
    21. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
    22. Robert H. McGuckin, 2002. "Computers and Productivity: are Aggregation Effects Important?," Economic Inquiry, Western Economic Association International, vol. 40(1), pages 42-59, January.
    23. Cette, Gilbert & Mairesse, Jacques & Kocoglu, Yusuf, 2005. "ICT diffusion and potential output growth," Economics Letters, Elsevier, vol. 87(2), pages 231-234, May.
    24. Francesco Daveri & Olmo Silva, 2004. "Not only Nokia: what Finland tells us about new economy growth," Economic Policy, CEPR;CES;MSH, vol. 19(38), pages 117-163, April.
    25. 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.
    26. Duncan Matthews, 1996. "The role of the firm in the evolution of European Environmental Rules:The case of the water industry," National Institute of Economic and Social Research (NIESR) Discussion Papers 92, National Institute of Economic and Social Research.
    27. Lucio Sarno & Mark P. Taylor, 2002. "Purchasing Power Parity and the Real Exchange Rate," IMF Staff Papers, Palgrave Macmillan, vol. 49(1), pages 1-5.
    28. Mirko Draca & Raffaella Sadun & John Van Reenen, 2006. "Productivity and ICT: A Review of the Evidence," CEP Discussion Papers dp0749, Centre for Economic Performance, LSE.
    29. William Nordhaus, 2005. "The Sources of the Productivity Rebound and the Manufacturing Employment Puzzle," NBER Working Papers 11354, National Bureau of Economic Research, Inc.
    30. Westerlund, Joakim & Edgerton, David L., 2007. "A panel bootstrap cointegration test," Economics Letters, Elsevier, vol. 97(3), pages 185-190, December.
    31. Belorgey, Nicolas & Lecat, Remy & Maury, Tristan-Pierre, 2006. "Determinants of productivity per employee: An empirical estimation using panel data," Economics Letters, Elsevier, vol. 91(2), pages 153-157, May.
    32. Marcel P. Timmer & Bart van Ark, 2005. "Does information and communication technology drive EU-US productivity growth differentials?," Oxford Economic Papers, Oxford University Press, vol. 57(4), pages 693-716, October.
    33. Frantzen, Dirk, 2000. " R&D, Human Capital and International Technology Spillovers: A Cross-Country Analysis," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(1), pages 57-75, March.
    34. Dutta, Dilip & Otsuka, Kozo, 2004. "Knowledge Spillover from Information and Communication Technology: A Comparative Study of Australia, Japan, South Korea and Taiwan," Working Papers 8, University of Sydney, School of Economics.
    35. Rolf Larsson & Johan Lyhagen & Mickael Lothgren, 2001. "Likelihood-based cointegration tests in heterogeneous panels," Econometrics Journal, Royal Economic Society, vol. 4(1), pages 1-41.
    36. Sanjeev Dewan & Kenneth L. Kraemer, 2000. "Information Technology and Productivity: Evidence from Country-Level Data," Management Science, INFORMS, vol. 46(4), pages 548-562, April.
    37. Dale W. Jorgenson & Mun S. Ho & Kevin J. Stiroh, 2003. "Lessons for Canada from the U.S. Growth Resurgence," International Productivity Monitor, Centre for the Study of Living Standards, vol. 6, pages 3-18, Spring.
    38. Pedroni, Peter, 1999. " Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 653-670, Special I.
    39. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    40. Stiroh, Kevin J, 2002. "Are ICT Spillovers Driving the New Economy?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(1), pages 33-57, March.
    41. Kumbhakar, Subal C. & Wang, Hung-Jen, 2005. "Estimation of growth convergence using a stochastic production frontier approach," Economics Letters, Elsevier, vol. 88(3), pages 300-305, September.
    42. Mary O'Mahony & Michela Vecchi, 2005. "Quantifying the Impact of ICT Capital on Output Growth: A Heterogeneous Dynamic Panel Approach," Economica, London School of Economics and Political Science, vol. 72(288), pages 615-633, November.
    43. Oulton, Nicholas & Srinivasan, Sylaja, 2005. "Productivity growth and the role of ICT in the United Kingdom: an industry view, 1970-2000," LSE Research Online Documents on Economics 19901, London School of Economics and Political Science, LSE Library.
    44. Nelson C. Mark & Donggyu Sul, 2003. "Cointegration Vector Estimation by Panel DOLS and Long-run Money Demand," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 65(5), pages 655-680, December.
    45. Laura Bottazzi & Giovanni Peri, 2005. "The International Dynamics of R&D and Innovation in the Short and in the Long Run," NBER Working Papers 11524, National Bureau of Economic Research, Inc.
    46. Timmer, Marcel P. & Ypma, Gerard & Ark, Bart van der, 2003. "IT in the European Union: driving productivity divergence?," GGDC Research Memorandum 200363, Groningen Growth and Development Centre, University of Groningen.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    ICT; economic growth; panel cointegration analysis;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:anc:wpaper:254. 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: (Maurizio Mariotti). General contact details of provider: http://edirc.repec.org/data/deancit.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.