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Information and Communication Technologies and Medium-Run Fluctuations

Author

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  • Marco Brianti

    (University of Alberta, Department of Economics)

  • Laura Gati

    (European Central Bank)

Abstract

This paper explores the possibility that productivity improvements in information and communication technologies (ICT) are a source of medium-run fluctuations in total factor productivity (TFP). We document in a structural VAR setting that innovations in ICT investment are followed by hump-shaped increases in TFP. Following the ICT literature, we use a two-sector model to suggest a mechanism behind the hump-shaped TFP response: that ICT is a general-purpose technology (GPT). Using impulse-response matching, we show that a model with a spillover from ICT capital is able to match the hump-shaped TFP response, hinting at the importance of the diffusion of ICT.

Suggested Citation

  • Marco Brianti & Laura Gati, 2021. "Information and Communication Technologies and Medium-Run Fluctuations," Working Papers 2021-11, University of Alberta, Department of Economics.
    • Handle: RePEc:ris:albaec:2021_011
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    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)

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