As the hottest new technology of the moment, the Internet offers a lot of hope for future economic growth. But the articles in this issue suggest some of the challenges that it poses, from the risk of privacy loss to the ease with which pornography can spread around the world.
Technological advances have shaped our economy by making work easier and enabling us to live longer and better. But they also pose some new policy challenges that should be taken seriously.
Many of the articles in this issue explore ways that government can encourage technological advance, as well as address some of the vexing new policy issues that it raises. For example, the article by David Austin and Molly Macauley shows how incentives can be used to encourage technologies that help clean up our environment.
The advancement of technology has reshaped business, disrupting industries and causing job displacement. But it also provides opportunities for businesses to reach more customers by connecting them globally, allowing them to expand their market and compete with companies from different parts of the world.
Some research suggests that shifts in expectations about future technology, which economists call news shocks, account for a substantial share of fluctuations in GDP. But determining the magnitude of these shocks has proven difficult. Several indirect approaches have been suggested, such as using movements in stock markets or firms’ patent filings. But the success of these methods crucially depends on whether they are accurate representations of expectations, and whether they can be measured reliably.