Technological Adoption with Imperfect Markets in the Italian Economy

Abstract

The last twenty years have seen a marked slowdown of the Italian productivity growth rate. The literature has underlined the role of international factors, such as globalization and adoption of the euro. In this paper we emphasize the role and dynamics of capital accumulation investigating the impact of the introduction of information technology on capital and production in the Italian economy and the extent to which that is being affected by skills in the labour force. The model is specified and estimated as continuous-time general disequilibrium framework. It presents original features: it analyzes the effects of the introduction of the ICT technology on the Italian economy not in a partial equilibrium context of a single market but from a macro point of view where input markets interact; it does not assume that these markets instantaneously clear but rather that there are imperfections and frictions; it does not impose the condition that the economy necessarily converges to a steady state. The model behaves quite well in replicating the dynamics of the Italian economy. It also shows however that there remains some structural inefficiency that worsened in recent years. In fact, our main finding shows that there exists a permanent gap between "optimal" and actual output which increased in the latter part of the sample period. While a fraction of this gap can be attributed to unavoidable (market and non market) adjustment costs some is associated to efficiency losses

Endogenizing the Ict Sector: A Multisector Approach

“…In Saltari et al (2012Saltari et al ( , 2013 we estimated a dynamic disequilibrium model of the Italian economy. The main argument of those papers is that the weakness of the Italian economy of the last two decades has been due to the slowdown of the total factor productivity (TFP).…”

“…In previous papers (Saltari et al, 2012(Saltari et al, , 2013, we examined the role of information and communication technology (ICT) in enhancing general production in the Italian economy. Those papers assume that the ICT contribution is exogenous.…”

Elasticity of Substitution and Technical Progress: Is There a Misspecification Problem?

“…The core of the model is composed by the following seven differential equation (for more details, see Saltari et al 2012):…”

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AbstractIn Saltari et al (2012Saltari et al ( , 2013 we estimated a dynamic model of the Italian economy. The main result of those papers is that the weakness of the Italian economy in the last two decades is due to the total factor productivity slowdown.

In those models the information and communication technology ( ) capital stock plays a key role in boosting the efficiency of the traditional capital, and hence of the whole economy.

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Economic Fluctuations in the U.S. and Euro Area: Quantifying the Contribution of Technical Change

“…Since the pioneer works by Solow (1956) and Arrow et al (1961), the CES production function has been extensively used in economics. Moreover, several empirical articles have found that the elasticity of substitution is well below unity (see, e.g., Antr as 2004; Klump, McAdam, and Willman 2007;Chirinko 2008;Le on-Ledesma, McAdam, and Willman 2010;Saltari et al, 2012Saltari et al, , 2013. Cantore et al (2015) were the first to introduce and estimate the CES for the U.S. into a medium-scale DSGE model a la Smets and Wouters (2005).…”