The American Economy Review

Abstract

The starting point for the economic debate is the thesis that the 1990's are a mirror image of the 1970's, when an unfavorable series of "supply shocks" led to stagflation-slower growth and higher inflation.2 In this view, the development of information technology (IT) is one of a series of positive, but temporary, shocks. The competing perspective is that IT has produced a fundamental change in the U.S. economy, leading to a permanent improvement in growth prospects.