@article{Shane:330906,
      recid = {330906},
      author = {Shane, Mathew and Roe, Terry},
      title = {The Global Effects of the New Economy: A Dynamic CGE  Analysis},
      address = {2001},
      pages = {16},
      year = {2001},
      note = {Presented at the 4th Annual Conference on Global Economic  Analysis, Purdue University, USA},
      abstract = {A critical question facing the global economy is whether  the new technology underlying the information revolution  will be persistent and translate into higher economic  growth in the United States and other countries around the  world. A key component of this happening will be government  and legislative action to provide incentives that  facilitate innovation, investments in human capital, and  the opening up the further development of capital markets  to mobilize the financing necessary to support new  technology innovations and implementation. In our paper, we  make a case that the new economy is unique and holds out  promise of accelerating growth around the world. Using a  simplified three sector dynamic CGE growth model, we show  that evidence of the productivity impact of the new economy  is already evident in the United States. Further spillover  effects could induce higher sustained growth rates in other  countries of the world that aggressively encourage the new  economy with policies that facilitate the adoption of  information technology, human capital development, and  openness to investment and capital flows. A three sector  neo-classical growth model is calibrated to the path of the  economy for the year 1987.2 The model is of the  Ramsey-Cass-Koopman’s variety with infinitely lived  households, three factors of production (labor, capital,  land) and three goods, a home good, an agricultural good,  and the rest of the economy. Labor and capital are mobile,  while land is sector specific. Capital and land are the two  assets in the model. Each sector of the economy is  permitted to have a different rate of growth in TFP with  TFP in agriculture exceeding that of the rest of the  economy, as shown in the data. The rest of the economy, and  agriculture are open, but foreign (domestic) households are  not permitted to have claims on other country assets. Rates  of growth in factor productivity, and factor shares are  taken from Jorgenson for the United States except that data  on sectoral total factor productivity (TFP) growth rates  were computed for the years 1987- 1992. The rate of time  discount and other parameters are taken from various other  sources (see Roe, 2000).},
      url = {http://ageconsearch.umn.edu/record/330906},
}