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Title: |
Another look at the Relationship between Telecommunications Investment and Economic Activity in the United States |
| Author: |
Wolde-Rufael, Yemane |
| Author
Affiliation: |
Equalities and Social Inclusion Team, London Borough of Camden, London, UK |
| Source: |
International Economic Journal, June 2007, v. 21, no. 2, pp. 199-206 |
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Publication Date: |
June 2007 |
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Abstract: |
In a recent issue of this journal, Beil, et al. (2005, hereafter, BFJ) examined the relationship between telecommunications investment and economic growth in the United States over the period 1947-1996. Based on results from Granger-Sims test, BFJ conclude that "… investment by telecommunications firms is caused by, but does not cause, economic activity, and the findings are robust across lag lengths". However, using another version of the Granger causality test due to Toda and Yamamoto (1995) and the same data set transformed into natural logarithms, the evidence in this paper indicates a feedback where there was a bi-directional causality between telecommunications investment and economic growth. This seems to suggest that policies aimed at stimulating the U.S. economy by accelerating investment in the telecommunications sector may be successful. |
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