The Productivity J-Curve: How Intangibles Complement General Purpose Technologies
American Economic Journal: Macroeconomics
vol. 13,
no. 1, January 2021
(pp. 333-72)
Abstract
General 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.Citation
Brynjolfsson, Erik, Daniel Rock, and Chad Syverson. 2021. "The Productivity J-Curve: How Intangibles Complement General Purpose Technologies." American Economic Journal: Macroeconomics, 13 (1): 333-72. DOI: 10.1257/mac.20180386Additional Materials
JEL Classification
- E22 Investment; Capital; Intangible Capital; Capacity
- E23 Macroeconomics: Production
- G31 Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
- L63 Microelectronics; Computers; Communications Equipment
- L86 Information and Internet Services; Computer Software
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