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Master Thesis Year : 2011

ICT spending and inflation at the sectorial level

Abstract

The dissertation attempts to estimate the impact of Information and Communication Technologies investment (ICT) on price setting at the sectoral level. The paper therefore fills a gap in the literature on the "new economy", which has so far focused mainly on the effect of ICT on productivity and wages. We define two possible channels : a "direct"one stemming from the decreasing cost of ICT capital, and an "indirect" coming from the productivity gains that ICT provides. We run regressions using panel data on the evolution of prices for 24 industries in two countries : the US and the Netherlands. We estimate the direct effect by including the evolution of total costs then splitting in into prices and volumes growth rates of each factor including ICT capital. The indirect effect, on the other hand, is captured using several 5 years moving average indicators of ICT investment and complementary investments that accompany it. We provide, what we believe, to be fairly reliable estimations of the price effect, and find suggestive evidence for the productivity channel.
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Dates and versions

dumas-00646563 , version 1 (30-11-2011)

Identifiers

  • HAL Id : dumas-00646563 , version 1

Cite

Louis Raffestin. ICT spending and inflation at the sectorial level. Pricing of Securities [q-fin.PR]. 2011. ⟨dumas-00646563⟩
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