The ‘New Economy’ : The Role of Policies and Institutions *

Abstract

The most important claim of the 'new economy' is that a new wave of technologies is lifting potential GDP. The effects were first seen in the United States. In the first half of the nineties, information and communication technologies (ICT) stimulated capital accumulation and employment, without any visible impact on productivity growth the so-called 'Solow paradox'. Starting in the middle of the decade, the long-awaited increase in productivity growth at last came about : from 1995 to 2001, average labour productivity in the US grew at 2.4%, one percentage point above the rate that prevailed between 1973 and 1995.