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The impact of ICT on the Italian productivity dynamics

  • E. et al. Saltari

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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Paper provided by University of Rome La Sapienza, Department of Public Economics in its series Working Papers with number 149.

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Length: 35
Date of creation: Nov 2011
Date of revision:
Handle: RePEc:sap:wpaper:wp149
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  1. Susanto Basu & David N. Weil, 1996. "Appropriate Technology and Growth," NBER Working Papers 5865, National Bureau of Economic Research, Inc.
  2. Francesco Caselli & Wilbur John Coleman II, 2006. "The World Technology Frontier," American Economic Review, American Economic Association, vol. 96(3), pages 499-522, June.
  3. Comin, D. & Hobijn, B., 2003. "Cross-Country Technology Adoption: Making the Theories Face the Facts," Working Papers 03-04, C.V. Starr Center for Applied Economics, New York University.
  4. Paul Beaudry & Mark Doms & Ethan Lewis, 2006. "Endogenous skill bias in technology adoption: city-level evidence from the IT revolution," Working Paper Series 2006-24, Federal Reserve Bank of San Francisco.
  5. Philippe Aghion & Peter Howitt, 2009. "The Economics of Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 9780262012638, June.
  6. Acemoglu, D. & Zilibotti, F., 1998. "Productivity Differences," Papers 660, Stockholm - International Economic Studies.
  7. Daron Acemoglu, 2002. "Directed Technical Change," Review of Economic Studies, Oxford University Press, vol. 69(4), pages 781-809.
  8. Daron Acemoglu, 2005. "Equilibrium Bias of Technology," NBER Working Papers 11845, National Bureau of Economic Research, Inc.
  9. Wymer, C R, 1972. "Econometric Estimation of Stochastic Differential Equation Systems," Econometrica, Econometric Society, vol. 40(3), pages 565-77, May.
  10. Rainer Klump & Peter McAdam & Alpo Willman, 2007. "Factor Substitution and Factor-Augmenting Technical Progress in the United States: A Normalized Supply-Side System Approach," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 183-192, February.
  11. Paul Beaudry & David Green, 1998. "What is Driving US and Canadian Wages: Exogenous Technical Change or Endogenous Choice of Technique?," NBER Working Papers 6853, National Bureau of Economic Research, Inc.
  12. Gandolfo, Giancarlo & Padoan, Pietro Carlo, 1990. "The Italian continuous time model : Theory and empirical results," Economic Modelling, Elsevier, vol. 7(2), pages 91-132, April.
  13. Enrico Saltari & Giuseppe Travaglini, 2009. "The Productivity Slowdown Puzzle. Technological and Non-technological Shocks in the Labor Market," International Economic Journal, Taylor & Francis Journals, vol. 23(4), pages 483-509.
  14. Francis J. Cronin & Elisabeth Colleran & Mark Gold, 1997. "Telecommunications, Factor Substitution And Economic Growth," Contemporary Economic Policy, Western Economic Association International, vol. 15(3), pages 21-31, 07.
  15. Atkinson, Anthony B & Stiglitz, Joseph E, 1969. "A New View of Technological Change," Economic Journal, Royal Economic Society, vol. 79(315), pages 573-78, September.
  16. Francesco Caselli, 1999. "Technological Revolutions," American Economic Review, American Economic Association, vol. 89(1), pages 78-102, March.
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