New Economy

Essay by cmdoUniversity, Master'sA+, July 2006

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What is the New Economy? In the simplest term, the New Economy is a term to describe the evolution of high technology-based economy in the United States (WikipediA). With the new developments in the Internet, telecommunications and computer sectors, this evolution as believed by many to have created a state of permanent and steady growth, low unemployment and immunity to boom-and-bust macroeconomic cycles. During the four years of 995-99, U. S. productivity growth experienced a strong revival and achieved growth rates exceeding that of the golden age' of 1913-72. Many observers have asserted the New Economy, its Internet and the accompanying acceleration of technical change in computers and telecommunications, to be an Industrial Revolution equal in importance, or even more important, than the Second Industrial Revolution of 1860-1900 which gave us electricity, motor and air transport, motion pictures, radio, indoor plumbing, and made the golden age of productivity growth possible.

However, in March and April of 2000, the NASDAQ crashed and fell from the level of nearly 5,000 to 2,000. During the crash, we have seen that a lot of high-tech and start-up companies went bankrupt (WikipediA). The stock market went through a correction, and a long-running economic debate is talking about the New Economy. Does the New Economy exist? It probably does, however, more evidences many be needed for economists and policymakers to acknowledge (Visco, 2000). The objective of this paper is to try to come to the answer whether the New Economy exists. This paper will discuss the beginning of the New Economy with the advance of new technologies, the staggering growth in U.S economy, the disequilibria in the New Economy, and conclusion regarding the existence of New Economy.

New Economy

In the 1990s, the U.S economy has been growing at a surprising pace for almost a decade,