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Information and Communication Technologies and Medium-Run Fluctuations

Marco Brianti () and Laura Gáti ()

No 2021-11, Working Papers from University of Alberta, Department of Economics

Abstract: This paper explores the possibility that productivity improvements in information and communication technologies (ICT) are a source of medium-run fluctuations in total factor productivity (TFP). We document in a structural VAR setting that innovations in ICT investment are followed by hump-shaped increases in TFP. Following the ICT literature, we use a two-sector model to suggest a mechanism behind the hump-shaped TFP response: that ICT is a general-purpose technology (GPT). Using impulse-response matching, we show that a model with a spillover from ICT capital is able to match the hump-shaped TFP response, hinting at the importance of the diffusion of ICT.

Keywords: information and communication technologies; general-purpose technologies; two-sector models; total factor productivity (search for similar items in EconPapers)
JEL-codes: E30 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2021-12-15
New Economics Papers: this item is included in nep-eff, nep-ict, nep-mac and nep-tid
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Handle: RePEc:ris:albaec:2021_011