When bull expectation collapses, how much can monetary policy alleviate the consequent economic adjustment? Since the mid-90s, the US technology and telecom sectors have led the IT-related demand as they experienced an investment boom with massive new entry to the market. The boom reflected a rise in the expected rate of growth based on the good prospect for the Internet business.
It also reflected the unique characteristics of the information industry such as the economy of scale and the network externality. The significant development in the IT areas has also raised the expected rate of growth for the US economy as a whole. However, as economic slowdown becomes more evident, cautious views are apparently growing with respect to the IT-led increase in productivity.