Quantifying the Impact of ICT Capital on Output Growth: A Heterogeneous Dynamic Panel Approach

19 Pages Posted: 6 Dec 2005

See all articles by Mary O'Mahony

Mary O'Mahony

National Institute of Economic and Social Research (NIESR); University of Birmingham - Business School

Michela Vecchi

National Institute of Economic and Social Research (NIESR)

Abstract

Using industry data for the United States and the United Kingdom, we provide new evidence on the impact of information and communications technology (ICT) capital on real output growth. The traditional industry panel data analysis fails to find a positive contribution. We argue that this is due to heterogeneity across industries, particularly in the time dimension. Pooling the data for the two countries and using a dynamic panel data estimation method yield a positive and significant effect of ICT on output growth. Individual country estimates suggest a strong impact in the United States, while results are less conclusive in the United Kingdom.

Suggested Citation

O'Mahony, Mary and Vecchi, Michela, Quantifying the Impact of ICT Capital on Output Growth: A Heterogeneous Dynamic Panel Approach. Economica, Vol. 72, No. 288, pp. 615-633, November 2005. Available at SSRN: https://ssrn.com/abstract=856665 or http://dx.doi.org/10.1111/j.1468-0335.2005.0435.x

Mary O'Mahony (Contact Author)

National Institute of Economic and Social Research (NIESR) ( email )

2 Dean Trench Street
Smith Square
London SW1P 3HE
United Kingdom

University of Birmingham - Business School

Edgbaston Park Road
Birmingham, B15 2TY
United Kingdom

Michela Vecchi

National Institute of Economic and Social Research (NIESR) ( email )

2 Dean Trench Street
Smith Square
London SW1P 3HE
United Kingdom
+44 (0) 20 7222 7665 (Phone)
+44 (0) 20 7654 1900 (Fax)

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