Are ICT Spillovers Driving the New Economy?

25 Pages Posted: 3 Nov 2003

See all articles by Kevin J. Stiroh

Kevin J. Stiroh

Federal Reserve Bank of New York


Some observers have raised the possibility that production spillovers and network effects associated with information and communications technology (ICT) are an important part of the "New Economy." Across U.S. manufacturing industries, however, ICT capital appears correlated with the acceleration of average labor productivity (ALP) growth as predicted by a standard production model, but not with total factor productivity (TFP) growth as these New Economy forces imply. Once one allows for productivity differences across industries, measured TFP growth is uncorrelated with all capital inputs, including ICT capital. This provides little evidence for a New Economy story of ICT-related spillovers or network effects driving TFP growth throughout U.S. manufacturing.

Suggested Citation

Stiroh, Kevin J., Are ICT Spillovers Driving the New Economy?. Available at SSRN:

Kevin J. Stiroh (Contact Author)

Federal Reserve Bank of New York ( email )

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