“The Productivity J-Curve: How Intangibles Complement General Purpose Technologies”, 2021 (; similar):
General purpose technologies (GPTs) like AI enable and require substantial 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% higher than official measures by the end of 2017.