TY - JOUR
T1 - Is the IT revolution over? An asset pricing view
AU - Ward, Colin
N1 - Publisher Copyright:
© 2019 Elsevier B.V.
PY - 2020/10
Y1 - 2020/10
N2 - I develop a method that structures financial market data to forecast economic outcomes. I use it to study the IT sector's transition to its long-run share in the US economy. The method uses a model which links economy-wide growth with IT's market valuation to match transition data on macroeconomic quantities, the sector's life cycle patterns, and, importantly, market valuation ratios. My central estimates indicate that the revolution ends between 2028 and 2034 and that future average labor productivity growth will fall to 1.7 percent from the 2.7 recorded over 1974–2015. I show empirically the IT sector's price-dividend ratio univariately explains over half of the variation in future productivity growth.
AB - I develop a method that structures financial market data to forecast economic outcomes. I use it to study the IT sector's transition to its long-run share in the US economy. The method uses a model which links economy-wide growth with IT's market valuation to match transition data on macroeconomic quantities, the sector's life cycle patterns, and, importantly, market valuation ratios. My central estimates indicate that the revolution ends between 2028 and 2034 and that future average labor productivity growth will fall to 1.7 percent from the 2.7 recorded over 1974–2015. I show empirically the IT sector's price-dividend ratio univariately explains over half of the variation in future productivity growth.
KW - Asset pricing
KW - Endogenous growth
KW - Financial markets
KW - IT Revolution
UR - http://www.scopus.com/inward/record.url?scp=85064661395&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85064661395&partnerID=8YFLogxK
U2 - 10.1016/j.jmoneco.2019.04.007
DO - 10.1016/j.jmoneco.2019.04.007
M3 - Article
AN - SCOPUS:85064661395
SN - 0304-3932
VL - 114
SP - 283
EP - 316
JO - Journal of Monetary Economics
JF - Journal of Monetary Economics
ER -