Abstract
THE CONTINUED STRENGTH and vitality of the U.S. economy continue to
astonish economic forecasters.1 A consensus is now emerging that
something fundamental has changed, with “new economy” proponents
pointing to information technology (IT) as the causal factor behind
the strong performance. In this view, technology is profoundly altering
the nature of business, leading to permanently higher productivity
growth throughout the economy. Skeptics remain, however, arguing
that the recent success reflects a series of favorable, but temporary,
shocks. This argument is buttressed by the view that the U.S. economy behaves rather differently than envisioned by the “new economy”
advocates.
