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Computers and Productivity: Are Aggregation Effects Important?

Author

Listed:
  • Robert H. McGuckin

    (The Conference Board)

  • Kevin Stiroh

    (Federal Reserve Bank of New York (formerly with The Conference Board))

Abstract

This paper examines the empirical implications of aggregation bias when measuring the productive impact of computers. To isolate two specific aggregation problems relating to "aggregation in variables" and "aggregation in relations," we compare various production function estimates across a range of specifications, econometric estimators, and data levels. The results show that both sources of bias are important, especially as one moves from the sector to the economy level, and when the elasticity of all types of non-computer capital are incorrectly restricted to be equal. In terms of computers, however, the estimated elasticity is surprisingly stable between industry and sector regressions and does not appear to be biased by the incorporation of a restrictive measure of non-computer capital. The data consistently show that computers have a large impact on output.

Suggested Citation

  • Robert H. McGuckin & Kevin Stiroh, 2000. "Computers and Productivity: Are Aggregation Effects Important?," Economics Program Working Papers 00-03, The Conference Board, Economics Program.
    • Handle: RePEc:cnf:wpaper:0003
    as

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    File URL: http://www.conference-board.org/economics/workingpapers.cfm?pdf=E-0003-00-WP
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    References listed on IDEAS

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    2. Duggal, Vijaya G. & Saltzman, Cynthia & Klein, Lawrence R., 2007. "Infrastructure and productivity: An extension to private infrastructure and it productivity," Journal of Econometrics, Elsevier, vol. 140(2), pages 485-502, October.

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    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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