The impact of ICT capital accumulation - A complete macroeconomic framework

C. Audenis, J. Deroyon and N. Fourcade
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C. Audenis: Insee
J. Deroyon: Insee
N. Fourcade: Insee

Documents de Travail de l'Insee - INSEE Working Papers from Institut National de la Statistique et des Etudes Economiques

Abstract: The paper aims at assessing the net impact of the accumulation of Information and Communication Technologies (ICT) capital on the economy. In a first part, focusing on the supply-side of the economy, we show that the growth accounting methodology cannot provide us with a measure of the net economic impact of ICT capital accumulation, since it does not take into account substitution between production factors. We develop a theoretical framework relying on the profit optimizing behaviour of firms that enables us to quantify the missing terms. Applying to French data over the period 1995-2000, with reasonable assumptions on elasticities of substitution, we find that the net impact of ICT capital accumulation on labour productivity growth is half the one computed by growth accounting studies. In a second part, we use this long-term framework in a macroeconometric model. We find that long-term effects have a small magnitude, and the demand effects are the larger ones over the period 1995-2000. However, total impact is rather weak, less than 0.1 percentage of PIB per year.

Keywords: growth accounting; aggregate productivity; elasticity of substitution; information and communication technologies; macroeconometric models (search for similar items in EconPapers)
JEL-codes: D21 E17 O30 O40 (search for similar items in EconPapers)
Date: 2002
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