On the Relationship between Telecommunications Investment and Economic Growth in the United States
Telepolicy Working Paper
6 Pages Posted: 7 Aug 2003
Date Written: June 2003
Using a time series of fifty years, the relationships between investment by telecommunications firms and Gross Domestic Product in the United States are examined. Granger-Sims causality tests are conducted, with proper allowance for both the non-stationarity of the data and lag length. These tests indicate that investment by telecommunications firms is caused by, but does not cause, economic activity, and the findings are robust across lag lengths. The evidence suggests that policies aimed at stimulating the U.S. economy by accelerating investment in the telecommunications sector may not be successful.
Keywords: telecommunications, investment, causality, granger, 1996 Telecommunications Act, unbundling, economic growth, recession, policy
JEL Classification: L5, L9, O4
Suggested Citation: Suggested Citation