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

Erik Brynjolfsson, Daniel Rock and Chad Syverson

No 25148, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: General purpose technologies (GPTs) such as AI enable and require significant complementary investments, including co-invention of new processes, products, business models and human capital. These complementary investments are often intangible and poorly measured in the national accounts, even when they create valuable assets for the firm. We develop a model that shows how this leads to an underestimation of productivity growth in the early years of a new GPT, and how later, when the benefits of intangible investments are harvested, productivity growth will be overestimated. Our model generates a Productivity J-Curve that can explain the productivity slowdowns often accompanying the advent of GPTs, as well as the increase in productivity later. We use our model to analyze empirically the historical roles of intangibles tied to R&D, software, and computer hardware. We find substantial and ongoing Productivity J-Curve effects for software in particular and computer hardware to a lesser extent. Our adjusted measure TFP is 11.3% higher than official measures at the end of 2004, and 15.9% higher than official measures at the end of 2017. We then assess how AI-related intangible capital may be currently affecting measured productivity and find the effects are small but growing.

JEL-codes: D2 E01 E22 O3 (search for similar items in EconPapers)
Date: 2018-10
New Economics Papers: this item is included in nep-eff and nep-mac
Note: EFG IO PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (29)

Published as Erik Brynjolfsson & Daniel Rock & Chad Syverson, 2021. "The Productivity J-Curve: How Intangibles Complement General Purpose Technologies," American Economic Journal: Macroeconomics, American Economic Association, vol. 13(1), pages 333-372, January.

Downloads: (external link)
http://www.nber.org/papers/w25148.pdf (application/pdf)

Related works:
Journal Article: The Productivity J-Curve: How Intangibles Complement General Purpose Technologies (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:25148

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w25148

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().