Another look at the Relationship between Telecommunications Investment and Economic Activity in the United States

Yemane Wolde-Rufael

International Economic Journal, 2007, vol. 21, issue 2, 199-205

Abstract: In a recent issue of this journal, Beil et al. (2005, hereafter, BFJ) examined the relationship between telecommunications investment and economic growth in the United States over the period 1947-1996. Based on results from Granger-Sims test, BFJ conclude that '… investment by telecommunications firms is caused by, but does not cause, economic activity, and the findings are robust across lag lengths'. However, using another version of the Granger causality test due to Toda & Yamamoto (1995) and the same data set transformed into natural logarithms, the evidence in this paper indicates a feedback where there was a bi-directional causality between telecommunications investment and economic growth. This seems to suggest that policies aimed at stimulating the US economy by accelerating investment in the telecommunications sector may be successful.

Keywords: Telecommunications investment; GDP; modified Granger causality (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (19)

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DOI: 10.1080/10168730701345372

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