A somewhat different conclusion has arisen lately when the same basic models of investment are applied to spending on computers alone. The latest research suggests that computers are quite sensitive to movements in the cost of capital.
The combination of an apparently high price elasticity and a rapid decline in relative computer prices -- 20 percent per year over the past decade -- likely led to the boom in high-tech investment. A third characteristic of high-tech investment is the magnitude of “external” or “spillover” effects that it generates.