ABSTRACT
The upswing phase of the technology cycle is driven by conditions in which the expected return to capital investment exceeds the cost of capital. The multiplier effect is strong during a technology cycle upswing because investment in new technology characterized by improved productivity creates productive wealth. The peak of the technology cycle occurs when the slate of investment opportunities that grew from stage-two innovation of a group of prototype inventions begins to diminish. Some of the physical plant capacity that was put in place during the technology-based upswing becomes redundant after the downturn, but continues to exist and to affect the earnings of owning firms. Persistently high unemployment is a greater immediate downside of a technology revolutionary episode. The reason is that a technology revolution profoundly alters an economy's productive paradigm and therefore can bring serious changes in labor markets.
