The Boom And Bust In Information Technology Investment
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Overview: This paper published by Federal Reserve Bank of San Francisco describes the growth rate of business investment in information technology boomed in the 1990s and 2000 before plunging in 2001. This boom and bust raises some natural questions: what were the reasons for the accentuated swings in growth rates and do those reasons portend for the future of IT investment? IT investment was much higher in 2000 than a model would predict. Another reason for the high growth rates in IT investment was that expectations were too high, especially in two sectors of the economy, telecommunications services and the dot-com sector.