University of Minnesota
This paper attempts to study the role of information technology (IT) in explaining the structural features of the Indian economy such as an increasing share of services in GDP and an increase in contribution of services in the acceleration in output per worker since 1993–2004. Using a multi-sector framework with three final goods and one intermediate good (stylized as IT) the author tries to find out if this framework can reproduce the above structural features. Simulating greater absorption of IT in the economy the author observes that her benchmark model allows for a close fit of GDP and sector outputs for the period 1991 to 2003. However, the model severally undershoots thereafter. To mimic the impact of greater IT absorption in the domestic economy the author applies a parametric experiment and call it the “Jorgenson Effect”. She asks whether this new economy can account for the sharp acceleration in GDP and sectoral outputs observed in the benchmark. Though she observes a closer fit of the data, the new economy still undershoots growth for the period 2003–09.
Date: October 12, 2011
Time: 03:30 P.M.
NCAER Conference Room
National Council of Applied Economic Research
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