R&D Capital and the Idea Production Function

Jakub Growiec, Peter McAdam and Jakub Mućk

No RWP 23-05, Research Working Paper from Federal Reserve Bank of Kansas City

Abstract: We supplement the “Idea Production Function” (IPF), whereby research and development (R&D) activity leads to growth, with measures of R&D capital. We construct the R&D capital stock in the United States and estimate the IPF with patent applications as R&D output, allowing for a flexible treatment of R&D productivity (over 1968–2019). The estimated substitution elasticity between R&D inputs is 0.7−0.8, which suggests that R&D capital is an essential factor in producing ideas and complementary to R&D labor. We identify a positive trend in R&D labor productivity (roughly 1 percent) and a cyclical variation of R&D capital productivity. Rather than “ideas getting harder to find,” the R&D capital needed to find them has become scarce.

Keywords: macroeconomics; Idea Production Function (IPF); R&D capital (search for similar items in EconPapers)
JEL-codes: O30 O40 O47 (search for similar items in EconPapers)
Pages: 62
Date: 2023-05-11
New Economics Papers: this item is included in nep-eff, nep-gro and nep-ino
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.kansascityfed.org/Research%20Working%2 ... rowiecmcadammuck.pdf Full Text (application/pdf)

Related works:
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:fip:fedkrw:96357

Ordering information: This working paper can be ordered from

DOI: 10.18651/RWP2023-05

Access Statistics for this paper

More papers in Research Working Paper from Federal Reserve Bank of Kansas City Contact information at EDIRC.
Bibliographic data for series maintained by Zach Kastens ().