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The Economic Effects of Business to Business Internet Activity

Author

Listed:
  • Martin Brookes

    (Goldman Sachs International, Peterborough Court, 133 Fleet Street, London EC4A 2BB)

  • Zaki Wahhaj

    (Goldman Sachs International, Peterborough Court, 133 Fleet Street, London EC4A 2BB)

Abstract

This article argues that an effective way to analyse the macroeconomic effects of business-to-business electronic commerce is to regard it as a decline in the cost of information to producers. Calculations based on input-output tables and the IMF’s Multimod macroeconomic model show that current estimates of such savings translate into about a 5 per cent long-run increase in output in the major industrialised economies. In the medium term, although the deflationary effects of the shock would provide greater room to central banks to keep interest rates low, the simulation results also hint at short-term inflation risks if current demand outstrips supply in anticipation of higher future incomes.

Suggested Citation

  • Martin Brookes & Zaki Wahhaj, 2001. "The Economic Effects of Business to Business Internet Activity," National Institute Economic Review, National Institute of Economic and Social Research, vol. 175(1), pages 95-108, January.
    • Handle: RePEc:sae:niesru:v:175:y:2001:i:1:p:95-108
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    Cited by:

    1. Nicholas Oulton, 2002. "ICT and Productivity Growth in the United Kingdom," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 18(3), pages 363-379.
    2. Tony Buxton & Gerry Kennally, 2004. "Economic policy, the new economy and the social rate of return to R&D in UK manufacturing," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 13(7), pages 655-670.
    3. Broadberry, Stephen & Ghosal, Sayantan, 2005. "Technology, organisation and productivity performance in services: lessons from Britain and the United States since 1870," Structural Change and Economic Dynamics, Elsevier, vol. 16(4), pages 437-466, December.

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