A Model of the Data Economy

Maryam Farboodi and Laura Veldkamp

No 28427, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In a data economy, transactions of goods and services generate information, which is stored, traded and depreciates. How are the economics of this economy different from traditional production or innovation economies? How do these differences matter for measurement of GDP, firm values, depreciation rates, welfare and externalities? Despite incorporating active experimentation and data as an intangible asset, we devise a tractable recursive representation. Because the resulting model maps to many observable macro and finance measures, it can be calibrated and estimated like its old-economy DSGE counterpart. The model also delivers insights: It rationalizes why apps are often “free,” why firm size is diverging and why even non-digital economic activity might be greater than GDP suggests.

JEL-codes: O3 O4 (search for similar items in EconPapers)
Date: 2021-02
New Economics Papers: this item is included in nep-big, nep-gro, nep-ict, nep-ore, nep-pay and nep-tid
Note: EFG
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