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The impact of ICT on the Italian productivity dynamics

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  • E. et al. Saltari

Abstract

The last twenty years have seen a marked slowdown of the Italian productivity growth rate. The literature has underlined the role of international factors, such as globalization and adoption of the euro. In this paper we emphasize the role and dynamics of capital accumulation investigating the impact of the introduction of information technology on capital and production in the Italian economy and the extent to which that is being affected by skills in the labour force. The model is specified and estimated as continuous-time general disequilibrium framework. It presents original features: it analyzes the effects of the introduction of the ICT technology on the Italian economy not in a partial equilibrium context of a single market but from a macro point of view where input markets interact; it does not assume that these markets instantaneously clear but rather that there are imperfections and frictions; it does not impose the condition that the economy necessarily converges to a steady state. The model behaves quite well in replicating the dynamics of the Italian economy. It also shows however that there remains some structural inefficiency that worsened in recent years. In fact, our main finding shows that there exists a permanent gap between “optimal†and actual output which increased in the latter part of the sample period. While a fraction of this gap can be attributed to unavoidable (market and non market) adjustment costs some is associated to efficiency losses.

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  • E. et al. Saltari, 2011. "The impact of ICT on the Italian productivity dynamics," Working Papers 149, University of Rome La Sapienza, Department of Public Economics.
  • Handle: RePEc:sap:wpaper:wp149
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    References listed on IDEAS

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    More about this item

    Keywords

    Technological adoption; Disequilibrium models; Continuous-time econometrics.;

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

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