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Quantifying the Impact of ICT Capital on Output Growth: A Heterogeneous Dynamic Panel Approach
Author(s) -
O'Mahony Mary,
Vecchi Michela
Publication year - 2005
Publication title -
economica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.532
H-Index - 65
eISSN - 1468-0335
pISSN - 0013-0427
DOI - 10.1111/j.1468-0335.2005.0435.x
Subject(s) - panel data , information and communications technology , pooling , economics , estimation , dimension (graph theory) , yield (engineering) , capital (architecture) , panel analysis , econometrics , industrial organization , computer science , geography , management , archaeology , world wide web , materials science , mathematics , artificial intelligence , pure mathematics , metallurgy
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.