The “New Economy”, Solow's Paradox, and Economic History

Abstract

Criticism of economists’ failure to find evidence of increased productivity from the use of new technology stems from a misunderstanding of basic economic theory; carelessness with the empirical evidence, and lack of historical perspective. Despite recent calls for a “new paradigm”, three basic macroeconomic tools show that the old rules and principles still apply. There have been other periods of economic history that have caused more structural economic change than the recent “technology revolution”.