Do We Have a "New" Macroeconomy?

Claims that we are in a "new economy" have become less strident over the past year with the collapse of Internet-company stock valuations. Nevertheless, the smart way to bet is that the data processing and data communications revolutions have significantly altered and will continue to alter the structure of the macroeconomy and the pattern of the business cycle. The information-technology revolution is the prime candidate for driving the acceleration in aggregate labor productivity growth in the 1990s, and the boom in information-technology investment promises to pay dividends in the form of accelerated aggregate labor productivity growth for at least a decade to come. It is a credible candidate for driving the reduction in the natural rate of unemployment (the NAIRU). It may well promise to diminish the aggregate economy's vulnerability to inventory fluctuations, which have for more than a century been a principal driving force behind the business cycle.