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

Erik Brynjolfsson; Daniel Rock; Chad Syverson

doi:10.1257/mac.20180386

journal article Jan 01, 2021

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

Erik Brynjolfsson

Daniel Rock Chad Syverson

American Economic Journal: Macroeconomics Vol. 13 No. 1 pp. 333-372 · American Economic Association

View at Publisher Save 10.1257/mac.20180386

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. (JEL E22, E23, G31, L63, L86)

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Details

Published: Jan 01, 2021
Vol/Issue: 13(1)
Pages: 333-372

Authors

E

Erik Brynjolfsson

Stanford University, Stanford Digital Economy Laboratory, 366 Galvez Street, Room 238, Stanford, CA 94305, and NBER (email: )

D

Daniel Rock

University of Pennsylvania, Wharton School, 3730 Walnut St, Philadelphia, PA 19104 (email: )

C

Chad Syverson

University of Chicago Booth School of Business, 5807 S. Woodlawn Ave., Chicago, IL 60637, and NBER (email: )

Cite This Article

Erik Brynjolfsson, Daniel Rock, Chad Syverson (2021). The Productivity J-Curve: How Intangibles Complement General Purpose Technologies. American Economic Journal: Macroeconomics, 13(1), 333-372. https://doi.org/10.1257/mac.20180386

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

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