ACADEMIC: A Look Back At Tech Spending By Big Biz
Federal Reserve Bank of New York
June 27, 2003
This paper examines patterns of capital expenditures across types of equipment and software as well as across industries during the recent investment boom and bust. The analysis indicates that the end of the boom and the bust reflect developments in the telecom sector, as the role of communications equipment was well beyond its size in the economy. More generally, industries that invested more during the boom reduced their capital expenditures more during the bust. One possible explanation for this pattern is that capital overhangs were one factor behind the bust.