Explaining a Productive Decade

Daniel E. Sichel,

Daniel E. Sichel Professor of Economics - Wellesley College

Stephen D. Oliner, and

SDO

Stephen D. Oliner Board of Governors of the Federal Reserve System

Kevin J. Stiroh

KJS

Kevin J. Stiroh Federal Reserve Bank of New York

Discussants: N. Gregory Mankiw and

N. Gregory Mankiw Robert M. Beren Professor of Economics - Harvard University

Martin Neil Baily

Martin Neil Baily Senior Fellow Emeritus - Economic Studies, Center on Regulation and Markets

PRODUCTIVITY GROWTH IN THE United States rose sharply in the mid-1990s,
after a quarter century of sluggish gains. That pickup was widely documented,
and a relatively broad consensus emerged that the speedup in the
second half of the 1990s was importantly driven by information technology
(IT).1 After 2000, however, the economic picture changed dramatically, with
a sharp pullback in IT investment, the collapse in the technology sector,
the terrorist attacks of September 11, 2001, and the 2001 recession. Given
the general belief that IT was a key factor in the growth resurgence in the
mid-1990s, many analysts expected that labor productivity growth would
slow as IT investment retreated after 2000. Instead labor productivity accelerated
further over the next several years. More recently, however, the
pace of labor productivity growth has slowed considerably.