October 30, 2002
Elasticities of Demand for High-Tech Goods

Elasticities of Demand for High-Tech Goods

What happens to the share of total spending on information technology capital when the price of IT-capital declines? Here is some evidence since 1987. The number is 0.6: when the price of IT-capital goods declines by ten percent, spending on IT-capital relative to GDP rises by six percent (note: not six percentage points: six percent--i.e., from 4 percent to 4.24 percent.

Posted by DeLong at October 30, 2002 04:54 PM | Trackback
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Avery interesting line. But is there any thoery to explain the peak -0.28 and the jump at 0.27 (approx). For some curious reason these seem almost symmetrical around zero too.

Posted by: Edward Hugh on October 31, 2002 02:15 AM

It would be easier for me to form an opinion about this graph if there was a way to know to which year (or period) observations belong to. That would help dismiss thir common factor worries.

Posted by: Jean-Philippe Stijns on October 31, 2002 11:57 AM
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