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The Productivity J-Curve: How Intangibles Complement General Purpose Technologies†

The Productivity J-Curve: How Intangibles Complement General Purpose Technologies† AbstractGeneral purpose technologies (GPTs) like AI enable and require significant complementary investments. These investments are often intangible and poorly measured in national accounts. We develop a model that shows how this can lead to underestimation of productivity growth in a new GPTs early years and, later, when the benefits of intangible investments are harvested, productivity growth overestimation. We call this phenomenon the Productivity J-curve. We apply our method to US data and find that adjusting for intangibles related to computer hardware and software yields a TFP level that is 15.9 percent higher than official measures by the end of 2017. (JEL E22, E23, G31, L63, L86) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Macroeconomics American Economic Association

The Productivity J-Curve: How Intangibles Complement General Purpose Technologies†

The Productivity J-Curve: How Intangibles Complement General Purpose Technologies†

American Economic Journal: Macroeconomics , Volume 13 (1) – Jan 1, 2021

Abstract

AbstractGeneral purpose technologies (GPTs) like AI enable and require significant complementary investments. These investments are often intangible and poorly measured in national accounts. We develop a model that shows how this can lead to underestimation of productivity growth in a new GPTs early years and, later, when the benefits of intangible investments are harvested, productivity growth overestimation. We call this phenomenon the Productivity J-curve. We apply our method to US data and find that adjusting for intangibles related to computer hardware and software yields a TFP level that is 15.9 percent higher than official measures by the end of 2017. (JEL E22, E23, G31, L63, L86)

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Publisher
American Economic Association
Copyright
Copyright © 2021 © American Economic Association
ISSN
1945-7715
DOI
10.1257/mac.20180386
Publisher site
See Article on Publisher Site

Abstract

AbstractGeneral purpose technologies (GPTs) like AI enable and require significant complementary investments. These investments are often intangible and poorly measured in national accounts. We develop a model that shows how this can lead to underestimation of productivity growth in a new GPTs early years and, later, when the benefits of intangible investments are harvested, productivity growth overestimation. We call this phenomenon the Productivity J-curve. We apply our method to US data and find that adjusting for intangibles related to computer hardware and software yields a TFP level that is 15.9 percent higher than official measures by the end of 2017. (JEL E22, E23, G31, L63, L86)

Journal

American Economic Journal: MacroeconomicsAmerican Economic Association

Published: Jan 1, 2021

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