A general purpose technology or GPT is a term coined to describe a new method of producing and inventing that is important enough to have a protracted aggregate impact. Electricity and information technology (IT) probably are the two most important GPTs so far. We analyze how the U.S. economy...

The Q-theory of investment says that a firm's investment rate should rise with its Q. We argue here that this theory also explains why some firms buy other firms. We find that 1. A firm's merger and acquisition (M&A) investment responds to its Q more -- by a factor of 2.6 -- than its direct...

Since 1968, the ratio of stock market capitalization to GDP has varied by a factor of 5. In 1972, the ratio stood at above unity, but by 1974, it had fallen to 0.45 where it stayed for the next decade. It then began a steady climb, and today it stands above 2. We argue that the IT revolution was...

In this survey, I discuss four sources of growth of knowledge: research, schooling, learning by doing, and training. In trying to disentangle what is important, I emphasize the following facts: (1) even the most advanced countries spend far more on adoption of existing technologies than on...

A new technology or product is often developed by the single entrepreneur. Whether he reaches the public offering stage or is acquired by a listed firm it takes time for the innovator to add value to the stock market. Indeed first, reduce the market's value because some firms -- usually large or...

A satisfactory account of the postwar growth experience of the United States should be able to come to terms with the following three facts: -Since the early 1970's there has been a slump in the advance of productivity. -The price of new equipment has fallen steadily over the postwar period....

Electricity and Information Technology (IT) are perhaps the two most important general purpose technologies (GPTs) to date. We analyze how the U.S. economy reacted to them. The Electricity and IT eras are similar, but also differ in several important ways. Electrification was more broadly...

We model Moore's Law as efficiency of computer producers that rises as a by-product of their experience. We find that (a) because computer prices fall much faster than the prices of electricity-driven and diesel-driven capital ever did, growth in the coming decades should be very fast, and that...

Investment of U.S. firms responds asymmetrically to Tobin's Q: Investment of established firms -- `intensive' investment -- reacts negatively to Q whereas investment of new firms -- `extensive' investment -- responds positively and elastically to Q. This asymmetry, we argue, reflects a...

We study 114 years of U.S. stock market data and find That there are large cohort effects in stock prices, effects that we label 'organization capital,' That cohort effects grew at a rate of 1.75% per year, That the debt-equity ratio of all vintages declined, That three big technological waves...