This paper examines the link between information technology (IT) and the post-1995 U.S. productivity revival. Industry-level data show a broad productivity growth resurgence that reflects both the production and the use of IT. The most IT-intensive industries experienced significantly larger productivity gains than other industries and there is a strong link between IT capital shares and the relative acceleration of labor productivity. A novel decomposition shows that all of the direct contribution to the post-1995 productivity acceleration can be traced to the industries that either produce IT or use IT most intensively, with no net contribution from other industries that are relatively isolated from the IT revolution.

Stockton, and conference participants for very useful comments and discussions. For extremely valuable help with data, they are grateful to Charlie Gilbert from the Federal Reserve Board, Bruce Grimm and David Wasshausen from the Bureau of Economic Analysis, and Michael Harper, Larry Rosenblum, and Steve Rosenthal from the Bureau of Labor Statistics. This paper draws heavily from the authors ’ earlier work, including text taken directly from Oliner and Sichel (2000a, b) and Sichel (1997). After a quarter-century of lackluster gains, the U.S. economy experienced a remarkable resurgence in productivity growth during the second half of the 1990s. From 1995 to 2000, output per hour in nonfarm business grew at an average annual rate of about 21 /2 percent compared with increases of only about 11 /2 percent per year from 1973 to 1995. 1 Our earlier work, along with other research, linked this improved performance to the

We provide a framework and evidence to confront two contradictory yet common assertions: (1) new technology such as the Internet favors businesses in urban areas and (2) the Internet reduces the importance of distance for economic activity. Controlling for other factors, we show that participation in the Internet is more likely in rural areas than in urban areas. Use of frontier technologies also arises in rural areas for interfirm technologies, which are associated with ending economic isolation. Nevertheless, talk of the dissolution of cities is premature. Frontier Internet technologies for intrafirm communication and advanced computing appear more often at establishments in urban areas, even with industry controls. Major urban areas also contain many establishments from information technology-intensive industries, whose presence could reinforce the concentration of frontier Internet technologies in these areas. (JEL classification L63, L86, R0).

Together with a sense of entering a New Economy, the US experienced in the second half of the 1990s an economic expansion, a stock market boom, a financing boom for new firms and productivity gains. In this paper, we propose an interpretation of these events within a general equilibrium model with financial frictions and decreasing returns to scale in production. We show that the mere prospect of high future productivity growth can generate sizable gains in current productivity, as well as the other above mentioned events.

During the 1990s there were three back-to-back events that stimulated investment in information technology: telecommunications deregulation in 1996, the ``year 2K' ' problem in 1998-99, and the ``dot com' ' boom in 1999-2000. The resulting investment boom led to dramatic run-up of stock prices for information technology companies.

During the Second Industrial Revolution, 1860—1900, many new technologies, including electricity, were invented. These inventions launched a transition to a new economy, a period of about 70 years of ongoing, rapid technical change. After this revolution began, however, several decades passed before measured productivity growth increased. This delay is paradoxical from the point of view of the standard growth model. Historians hypothesize that this delay was due to the slow diffusion of new technologies among manufacturing plants together with the ongoing learning in plants after the new technologies had been adopted. The slow diffusion is thought to be due to manufacturers’ reluctance to abandon their accumulated expertise with old technologies, which were embodied in the design of existing plants. Motivated by these hypotheses, we build a quantitative model of technology diffusion which we use to study this transition to a new economy. We show that it implies both slow diffusion and a delay in growth similar to that in the data. Atkeson and Kehoe thank the National Science Foundation. The views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System. The period 1860—1900 is often called the Second Industrial Revolution because a large number of new technologies were invented at that time. These inventions heralded a period

In 1953, a young female Macaque monkey in the south of Japan washed a muddy sweet potato in a stream before eating it. This obvious improvement in food preparation was imitated quickly by other monkeys and in less than 10 years it became the norm in her immediate group; by 1983, the method had diffused completely. In 1956, the same monkey

Previous empirical literature has shown that technological change can be considered the main cause of the skill bias (increase in the number of high skilled workers) exhibited by manufacturing employment in developed countries over the last decades. However, recent papers have also introduced the “Skill Biased Organisational Change ” hypothesis. We estimate a SUR model for a sample of 400 Italian manufacturing firms, showing that the upskilling is more a function of the reorganisational strategy than a consequence of technological change alone. Moreover, some evidence of superadditive effects emerges, consistently with the theoretical hypothesis of a coevolution of technology and organisation.

and by Takatoshi Ito and John Taylor, the paper’s discussants. The views expressed are the author’s own and do not represent those Together with many policymakers and economists, I see in the 1990s expansion signs that new technologies that had been emerging for some time were finally paying off in stronger economic performance. I will use the expression ‘new economy ’ to describe this period, although I recognize the pitfalls in this name. New economy is probably too broad a term and implies both

Using company account data for the US and four European countries this paper analyses the impact of ICT spillovers on companies ’ performance. We use different definitions of spillovers to account for inter and intra-industry spillover effects, as well as assessing the presence of spillovers from the US to Europe. We also look at the possibility that spillovers might take some time to materialise, by comparing their short and long run impact. Our results show that ICT spillovers affect productivity differently in the US and in Europe in the short run but in the long run such differences are less profound. JEL classification: C23, D24, D62 Keywords: R&D and ICT capital, dynamic spillovers, panel unit root tests, panel cointegration tests. This paper was funded by the European Commission ‘Fifth Framework ’ program. We wish to thank Ian Marsh, Mary O'Mahony, Catherine Robinson and Lucy Stokes for comments.. Any errors are the authors ’ sole responsibility.