Comments on Haimowitz, “Has the Surge in Computer Spending Fundamentally Changed the Economy?” Spending for computers has increased both in absolute terms and as a percent of GDP. Average growth per year of the computer sector 1982-96 was 26 percent; compared to annual GDP growth of 2.6 percent. Some economists and technology industry boosters claim that the spending for computers is a highly important factor in explaining robust growth and moderate inflation in the U.S. since 1982. Does this argument hold water?

Real Computer Spending as a Share in the Major GDP Categories Source: Haimowitz (1998, p. 31).

Haimowitz’s method Growth rate of the real capital stock of computing equipment Contribution of Computer Equipment to Growth Income share of computing equipment  = Where, Income share of computing is the change in in real output (real income) resulting from an incremental change in the stock of computer equipment, ceteris paribus.

Contribution of Computing Equipment to Nonfarm Output Source: Haimowitz (1998, p. 34)

In other words, Haimowitz estimates that about 10 1/2 percent of the growth of real output in the U.S. between 1992-92 can be explained by increases in spending for computers and software