IDEAS home Printed from https://ideas.repec.org/p/bri/uobdis/02-542.html
   My bibliography  Save this paper

An Assessment of the New Economy

Author

Listed:
  • Jonathan Temple

    ()

Abstract

The remarkable economic success of the United States in the 1990s led many observers to talk about a "New Economy". This paper provides an overview of the main issues, including faster productivity growth, the stability of inflation despite very low unemployment, the reduction in output volatility, the role of monetary policy, and the boom in the stock market. The paper also considers whether or not the acceleration in productivity growth can be sustained, and the possible implications for the rest of the world.

Suggested Citation

  • Jonathan Temple, 2002. "An Assessment of the New Economy," Bristol Economics Discussion Papers 02/542, School of Economics, University of Bristol, UK.
  • Handle: RePEc:bri:uobdis:02/542
    as

    Download full text from publisher

    File URL: http://www.efm.bris.ac.uk/ecjrwt/abstracts/jtnewecon.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Gali, Jordi & Lopez-Salido, J. David & Valles, Javier, 2003. "Technology shocks and monetary policy: assessing the Fed's performance," Journal of Monetary Economics, Elsevier, vol. 50(4), pages 723-743, May.
    2. Nicholas Oulton, 2002. "ICT and Productivity Growth in the United Kingdom," Oxford Review of Economic Policy, Oxford University Press, vol. 18(3), pages 363-379.
    3. Robert E. Hall, 2001. "The Stock Market and Capital Accumulation," American Economic Review, American Economic Association, vol. 91(5), pages 1185-1202, December.
    4. Robert J. Gordon, 1998. "Foundations of the Goldilocks Economy: Supply Shocks and the Time-Varying NAIRU," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(2), pages 297-346.
    5. Laurence Ball & Robert Moffitt, 2001. "Productivity Growth and the Phillips Curve," NBER Working Papers 8421, National Bureau of Economic Research, Inc.
    6. Stephen R. Bond & Jason G. Cummins, 2000. "The Stock Market and Investment in the New Economy: Some Tangible Facts and Intangible Fictions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(1), pages 61-124.
    7. Martin N. Baily, 2001. "Macroeconomic implications of the new economy," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 201-268.
    8. Martin Neil Baily, 2001. "Macroeconomic Implications of the New Economy," Working Paper Series WP01-9, Peterson Institute for International Economics.
    9. 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.
    10. Marcus Miller & Paul Weller & Lei Zhang, 2002. "Moral Hazard and the US Stock Market: Analysing the "Greenspan Put"," Economic Journal, Royal Economic Society, vol. 112(478), pages 171-186, March.
    11. MartinNeil Baily & Robert Z. Lawrence, 2001. "Do We Have a New E-conomy?," American Economic Review, American Economic Association, vol. 91(2), pages 308-312, May.
    12. Matti Pohjola, 2002. "The New Economy in Growth and Development," Oxford Review of Economic Policy, Oxford University Press, vol. 18(3), pages 380-396.
    13. Mankiw, N Gregory, 2001. "The Inexorable and Mysterious Tradeoff between Inflation and Unemployment," Economic Journal, Royal Economic Society, vol. 111(471), pages 45-61, May.
    14. Margaret M. McConnell & Patricia C. Mosser & Gabriel Perez-Quiros, 1999. "A decomposition of the increased stability of GDP growth," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 5(Aug).
    15. 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.
    16. Greenhalgh, Christine & Gregory, Mary, 2001. "Structural Change and the Emergence of the New Service Economy," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(0), pages 629-646, Special I.
    17. Bruce E. Hansen, 2001. "The New Econometrics of Structural Change: Dating Breaks in U.S. Labour Productivity," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 117-128, Fall.
    18. Laurence Ball & Robert R. Tchaidze, 2002. "The Fed and the New Economy," American Economic Review, American Economic Association, vol. 92(2), pages 108-114, May.
    19. Erik Brynjolfsson & Lorin M. Hitt, 2000. "Beyond Computation: Information Technology, Organizational Transformation and Business Performance," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 23-48, Fall.
    20. Danny Quah, 2002. "Technology Dissemination and Economic Growth: Some Lessons for the New Economy," CEP Discussion Papers dp0522, Centre for Economic Performance, LSE.
    21. Brent R. Moulton, 2000. "Getting the 21st-Century GDP Right: What's Underway?," American Economic Review, American Economic Association, vol. 90(2), pages 253-258, May.
    22. Machin, Stephen, 2001. "The Changing Nature of Labour Demand in the New Economy and Skill-Biased Technology Change," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(0), pages 753-776, Special I.
    23. Richard B. Freeman, 2002. "The Labour Market in the New Information Economy," Oxford Review of Economic Policy, Oxford University Press, vol. 18(3), pages 288-305.
    24. 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.
    25. Martin L. Weitzman, 1976. "On the Welfare Significance of National Product in a Dynamic Economy," The Quarterly Journal of Economics, Oxford University Press, vol. 90(1), pages 156-162.
    26. Boyan Jovanovic & Jeremy Greenwood, 1999. "The Information-Technology Revolution and the Stock Market," American Economic Review, American Economic Association, vol. 89(2), pages 116-122, May.
    27. Robert Shimer, 1999. "Why is the U.S. Unemployment Rate So Much Lower?," NBER Chapters, in: NBER Macroeconomics Annual 1998, volume 13, pages 11-74, National Bureau of Economic Research, Inc.
    28. Quah, Danny, 2002. "Technology Dissemination and Economic Growth: Some Lessons for the New Economy," CEPR Discussion Papers 3207, C.E.P.R. Discussion Papers.
    29. Eli Ofek & Matthew Richardson, 2002. "The Valuation and Market Rationality of Internet Stock Prices," Oxford Review of Economic Policy, Oxford University Press, vol. 18(3), pages 265-287.
    30. 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(2), pages 273-334.
    31. Kevin J. Stiroh, 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.
    32. Charles I. Jones, 2002. "Sources of U.S. Economic Growth in a World of Ideas," American Economic Review, American Economic Association, vol. 92(1), pages 220-239, March.
    33. Martin Neil Baily, 1981. "Productivity and the Services of Capital and Labor," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 12(1), pages 1-66.
    34. William D. Nordhaus, 2002. "Productivity Growth and the New Economy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 33(2), pages 211-265.
    35. Olivier Blanchard & John Simon, 2001. "The Long and Large Decline in U.S. Output Volatility," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(1), pages 135-174.
    36. John Y. Campbell & Robert J. Shiller, 2001. "Valuation Ratios and the Long-Run Stock Market Outlook: An Update," NBER Working Papers 8221, National Bureau of Economic Research, Inc.
    37. Kevin Stiroh, 1999. "Is There a New Economy?," Challenge, Taylor & Francis Journals, vol. 42(4), pages 82-101, July.
    38. Richard B. Freeman, 2001. "The Rising Tide Lifts...?," NBER Working Papers 8155, National Bureau of Economic Research, Inc.
    39. Karl Whelan, 2002. "Computers, Obsolescence, And Productivity," The Review of Economics and Statistics, MIT Press, vol. 84(3), pages 445-461, August.
    40. David Card & John E. DiNardo, 2002. "Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 733-783, October.
    41. Bart Hobijn & Boyan Jovanovic, 2001. "The Information-Technology Revolution and the Stock Market: Evidence," American Economic Review, American Economic Association, vol. 91(5), pages 1203-1220, December.
    42. Jonathan Temple, 2000. "Inflation and Growth: Stories Short and Tall," Journal of Economic Surveys, Wiley Blackwell, vol. 14(4), pages 395-426, September.
    43. Michael J. Boskin, 2000. "Economic Measurement: Progress and Challenges," American Economic Review, American Economic Association, vol. 90(2), pages 247-252, May.
    44. Laurence Ball, 1999. "Aggregate demand and Long-Run Unemployment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 30(2), pages 189-252.
    45. Alwyn Young, 1995. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 641-680.
    46. Freeman, Richard B & Schettkat, Ronald, 2001. "Marketization of Production and the US-Europe Employment Gap," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(0), pages 647-670, Special I.
    47. Kevin J. Stiroh & Dale W. Jorgenson, 2000. "U.S. Economic Growth at the Industry Level," American Economic Review, American Economic Association, vol. 90(2), pages 161-167, May.
    48. Robert J. Gordon, 2002. "Technology and Economic Performance in the American Economy," NBER Working Papers 8771, National Bureau of Economic Research, Inc.
    49. Paul Schreyer, 2002. "Computer Price Indices and International Growth and Productivity Comparisons," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(1), pages 15-31, March.
    50. Barry P. Bosworth & Jack E. Triplett, 2001. "What's New About the New Economy? IT, Economic Growth and Productivity," International Productivity Monitor, Centre for the Study of Living Standards, vol. 2, pages 19-30, Spring.
    51. Kevin J. Stiroh, 2002. "Measuring Information Technology and Productivity in the New Economy," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 3(1), pages 43-58, January.
    52. Dean Baker, 2002. "Is the New Economy Wearing Out?," Challenge, Taylor & Francis Journals, vol. 45(1), pages 117-121.
    53. repec:rus:hseeco:15966 is not listed on IDEAS
    54. Richard Kneller & Garry Young, 2001. "The New British Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 177(1), pages 70-84, July.
    55. Wynne Godley, 1999. "Seven Unsustainable Processes: Medium-Term Prospects and Policies for the United States and the World," Economics Strategic Analysis Archive 99-10, Levy Economics Institute.
    56. Muellbauer, John & Nunziata, Luca, 2001. "Credit, the Stock Market and Oil: Forecasting US GDP," CEPR Discussion Papers 2906, C.E.P.R. Discussion Papers.
    57. John Van Reenen, 2001. "The new economy: reality and policy," Fiscal Studies, Institute for Fiscal Studies, vol. 22(3), pages 307-336, September.
    58. Prakash Loungani, 2002. "There Will Be Growth in the Spring," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 3(1), pages 1-6, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Duo QIN, 2010. "Is China’s Rising Service Sector Leading to Cost Disease?," EcoMod2004 330600116, EcoMod.
    2. 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.
    3. Alistair Dieppe & Jerome Henry & Peter Mc Adam, "undated". "Labour market dynamics in the euro area: A model-based sensitivity analysis," Modeling, Computing, and Mastering Complexity 2003 09, Society for Computational Economics.
    4. Fernando Alexandre, 2002. "Monetary Policy, Investment and Non-Fundamental Shocks," NIPE Working Papers 6/2002, NIPE - Universidade do Minho.
    5. Gavin Wallis, 2009. "Capital Services Growth in the UK: 1950 to 2006," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(6), pages 799-819, December.
    6. Gavin Cameron & Chris Wallace, 2002. "Macroeconomic Performance in the Bretton Woods Era and After," Oxford Review of Economic Policy, Oxford University Press, vol. 18(4), pages 479-494.
    7. Jonathan Perraton, 2006. "Heavy Constraints on a “Weightless World”?," American Journal of Economics and Sociology, Wiley Blackwell, vol. 65(3), pages 641-691, July.
    8. Attfield, Cliff & Temple, Jonathan R.W., 2010. "Balanced growth and the great ratios: New evidence for the US and UK," Journal of Macroeconomics, Elsevier, vol. 32(4), pages 937-956, December.
    9. Qin, Duo, 2006. "Is China's growing service sector leading to cost disease?," Structural Change and Economic Dynamics, Elsevier, vol. 17(3), pages 267-287, September.
    10. Isabel Álvarez & Gerardo Magaña, 2007. "ICT and Cross-Country Comparisons: a Proposal of a New Composite Index," Working Papers del Instituto Complutense de Estudios Internacionales 0701, Universidad Complutense de Madrid, Instituto Complutense de Estudios Internacionales.
    11. Mariano Sana, 2010. "Immigrants and natives in U.S. science and engineering occupations, 1994–2006," Demography, Springer;Population Association of America (PAA), vol. 47(3), pages 801-820, August.
    12. Cliff L.F. Attfield & Jonathan R.W. Temple, 2003. "Measuring trend output: how useful are the Great Ratios?," Bristol Economics Discussion Papers 03/555, School of Economics, University of Bristol, UK.
    13. David, Freshwater, 2013. "Modernizing Rural Economies: Strengthening Economic Growth in the 21st Century," Staff Papers 174107, University of Kentucky, Department of Agricultural Economics.
    14. repec:ucm:wpaper:01-07 is not listed on IDEAS
    15. Jonathan Temple & Cliff Attfield, 2004. "Measuring trend growth: how useful are the great ratios?," Money Macro and Finance (MMF) Research Group Conference 2003 101, Money Macro and Finance Research Group.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pierre-Alain Muet, 2006. "Impacts économiques de la révolution numérique," Revue économique, Presses de Sciences-Po, vol. 57(3), pages 347-375.
    2. Gilbert Cette & Christian Pfister, 2004. "Challenges of the “New Economy” for Monetary Policy," International Productivity Monitor, Centre for the Study of Living Standards, vol. 8, pages 27-36, Spring.
    3. Susanto Basu & John G. Fernald & Nicholas Oulton & Sylaja Srinivasan, 2004. "The Case of the Missing Productivity Growth, or Does Information Technology Explain Why Productivity Accelerated in the United States But Not in the United Kingdom?," NBER Chapters, in: NBER Macroeconomics Annual 2003, Volume 18, pages 9-82, National Bureau of Economic Research, Inc.
    4. Basu, Susanto & Fernald, John G. & Shapiro, Matthew D., 2001. "Productivity growth in the 1990s: technology, utilization, or adjustment?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 55(1), pages 117-165, December.
    5. Dale W. Jorgenson & Mun S. Ho & Kevin J. Stiroh, 2005. "Growth of U.S. Industries and Investments in Information Technology and Higher Education," NBER Chapters, in: Measuring Capital in the New Economy, pages 403-478, National Bureau of Economic Research, Inc.
    6. Christophe Boucher, 2003. "Stock Market Valuation : the Role of the Macroeconomic Risk Premium," Finance 0305011, University Library of Munich, Germany.
    7. Argandoña, Antonio, 2001. "Nueva economía y el crecimiento económico, La," IESE Research Papers D/437, IESE Business School.
    8. Martin N. Baily, 2001. "Macroeconomic implications of the new economy," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 201-268.
    9. Martin Neil Baily, 2002. "Distinguished Lecture on Economics in Government: The New Economy: Post Mortem or Second Wind?," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 3-22, Spring.
    10. Dale W. Jorgenson & Mun S. Ho & Kevin J. Stiroh, 2008. "A Retrospective Look at the U.S. Productivity Growth Resurgence," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 3-24, Winter.
    11. Jung, Hyun-Joon & Na, Kyoung-Youn & Yoon, Chang-Ho, 2013. "The role of ICT in Korea’s economic growth: Productivity changes across industries since the 1990s," Telecommunications Policy, Elsevier, vol. 37(4), pages 292-310.
    12. Robert W. Fairlie, 2006. "The Personal Computer and Entrepreneurship," Management Science, INFORMS, vol. 52(2), pages 187-203, February.
    13. Oliner, Stephen D. & Sichel, Daniel E. & Stiroh, Kevin J., 2008. "Explaining a productive decade," Journal of Policy Modeling, Elsevier, vol. 30(4), pages 633-673.
    14. John Laitner & Dmitriy Stolyarov, 2003. "Technological Change and the Stock Market," American Economic Review, American Economic Association, vol. 93(4), pages 1240-1267, September.
    15. Jason G. Cummins & Giovanni L. Violante, 2002. "Investment-Specific Technical Change in the US (1947-2000): Measurement and Macroeconomic Consequences," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(2), pages 243-284, April.
    16. Nicholas Oulton & Sylaja Srinivasan, 2003. "Capital stocks, capital services, and depreciation: an integrated framework," Bank of England working papers 192, Bank of England.
    17. Kevin J. Stiroh, 2002. "Information Technology and the U.S. Productivity Revival: What Do the Industry Data Say?," American Economic Review, American Economic Association, vol. 92(5), pages 1559-1576, December.
    18. Crafts, Nicholas, 2002. "The Solow Productivity Paradox in Historical Perspective," CEPR Discussion Papers 3142, C.E.P.R. Discussion Papers.
    19. Oliner, Stephen D. & Sichel, Daniel E., 2003. "Information technology and productivity: where are we now and where are we going?," Journal of Policy Modeling, Elsevier, vol. 25(5), pages 477-503, July.
    20. Susanto Basu & John G. Fernald & Nicholas Oulton & Sylaja Srinivasan, 2003. "The Case of the Missing Productivity Growth: Or, Does Information Technology Explain why Productivity Accelerated in the US but not the UK?," NBER Working Papers 10010, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    new economy; economic growth; stock market; monetary policy;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

    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:bri:uobdis:02/542. 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: (Vicky Jackson). General contact details of provider: https://edirc.repec.org/data/sebriuk.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.