Contents

Abstract 1182

Keywords 1183

1. Introduction 1184

1.1. WhatisaGPT? 1185

1.2. Summaryoffindings 1186

1.2.1. SimilaritiesbetweentheElectrificationandITeras 1186

1.2.2.

2. Measuring the three characteristics of a GPT 1187

2.1. Pervasiveness of the GPT 1187

2.1.1. Pervasiveness in the aggregate 1187

2.1.2. Pervasivenessamongsectors 1189

2.1.3. Adoptionbyhouseholds 1193

2.1.4. OndatingtheendpointsofaGPTera 1194

2.2. Improvement of the GPT 1195

2.3. Ability of the GPT to spawn innovation 1198

2.3.1. Patenting 1198

2.3.2. Investment by new firms vs. investment by incumbents 1200

3. OthersymptomsofaGPT 1203

3.1. Productivity slowdown 1204

3.2. The skill premium 1205

3.3. Entry, exit, and mergers should rise 1206

3.4. Stock prices should fall 1207

Handbook of Economic Growth, Volume 1B. Edited by Philippe Aghion and StevenN. Durlauf © 2005 Elsevier B.V All rights reserved

DOI: 10.1016∕S1574-0684(05)01018-X

3.5. Youngfirmsshoulddobetter 1208

3.5.1. The age of the leadership 1208

3.5.2. TheageoffirmsattheirIPO 1210

3.5.3. The stock market performance of the young vs. old after entry 1215

3.6. Consumption, interest rates, and the trade deficit 1217

3.6.1. The trade deficit 1218

3.6.2. The consumption-income ratio 1218

3.6.3. Interest rates 1220

4. Conclusion 1221

Acknowledgements 1221

References 1221