Notes

1. For a more general treatment of the literature on IT value see reviews by Attewell and Rule (1984), Brynjolfsson (1993), Wilson (1995), and Brynjolfsson and Yang (1996). For a discussion of the problems in economic measurement of computers contributions at the macroeconomic level see Baily and Gordon (1988), Siegel (1997), and Gullickson and Harper (1999).

2. These studies assumed a standard form (Cobb-Douglas) for the production function, and measured the variables in logarithms. In general, using different functional forms, such as the transcendental logarithmic (translog) production function, has little effect on the measurement of output elasticities.

3. Hitt (1996) and Brynjolfsson and Hitt (2000) present a formal analysis of this issue.

4. Part of the difference in coefficients between short and long difference specifications could also be explained by measurement error (which tends to average out somewhat over longer time periods). Such errors-in-variables can bias down coefficients based on short differences, but the size of the change is too large to be attributed solely to this effect (Brynjolfsson and Hitt 2000).

5. Kelley (1994) found that the use of programmable manufacturing equipment is correlated with several aspects of human resource practices.

6. It is worth noting that if the exact quality change of an intermediate good is mismeasured, then the total productivity of the economy is not affected, only the allocation between sectors. However, if computer-using industries take advantage of the radical change in input costs and quality to introduce new quality levels (or entirely new goods) and these changes are not fully reflected in final output deflators, then total productivity will be affected. In periods of rapid technological change, both phenomena are common.