Investment-specific technological progress in the United Kingdom

Hasan Bakhshi and Jens Larsen ()

Bank of England working papers from Bank of England

Abstract: This paper analyses the impact of rapid technological change in the information and communications technology (ICT) sector on economic growth. Technological change in the ICT sector leads to a fall in the relative price of ICT goods, which leads firms to invest more heavily in high-tech goods. The approach is to build a dynamic general equilibrium model that is consistent with key stylised facts of the UK economy. The model is used to quantify the contribution to long-run growth of technological progress that is specific to the ICT sector. It is found that technological progress that is specific to the ICT sector might account for around 20%-30% of long-run labour productivity growth. But this conclusion depends crucially on how ICT prices are measured. It is shown that shocks to technological progress that is specific to production of ICT investment goods can have very different macroeconomic implications from a shock that applies to production of all goods. It is demonstrated that a permanent increase in the growth rate of ICT-specific technological progress will increase the investment expenditure share of GDP but lower the aggregate depreciation rate, while an increase in the return to investment in ICT will increase both the expenditure share and the depreciation rate.

Date: 2001-04
New Economics Papers: this item is included in nep-dge, nep-eec, nep-fin, nep-ino and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.bankofengland.co.uk/archive/Documents/h ... apers/2001/wp129.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.bankofengland.co.uk/archive/Documents/historicpubs/workingpapers/2001/wp129.pdf [301 Moved Permanently]--> https://www.bankofengland.co.uk/archive/Documents/historicpubs/workingpapers/2001/wp129.pdf)

Related works:
Chapter: Investment-specific technological progress in the United Kingdom (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:129

Access Statistics for this paper

More papers in Bank of England working papers from Bank of England Bank of England, Threadneedle Street, London, EC2R 8AH. Contact information at EDIRC.
Bibliographic data for series maintained by Digital Media Team ().