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Intangible Capital, Returns to Scale and Aggregate Price Stickiness

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  • Zhiyong An

    (Fiscal Affairs Department, International Monetary Fund)

Abstract

Intangible capital has become a large and increasingly important part of firms' capital stocks, especially over the last three decades. A common premise in the literature on intangible capital is that it can contribute to higher returns to scale. In this article, we study the impact of rising intangible capital on aggregate price stickiness via the channel of returns to scale in New Keynesian economics. Our basic methodology is to base on An (2009, 2022) to do a comparative static analysis regarding returns to scale. We show that the impact is theoretically ambiguous thanks to strategic complementarity (Cooper and John, 1988). Our analysis suggests that fiscal and monetary policies can re- spond to the rising intangible capital by varying and coordinating their impact on aggregate price stickiness to stabilize the economy.

Suggested Citation

  • Zhiyong An, 2025. "Intangible Capital, Returns to Scale and Aggregate Price Stickiness," Annals of Economics and Finance, Society for AEF, vol. 26(1), pages 377-388, May.
    • Handle: RePEc:cuf:journl:y:2025:v:26:i:1:an
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    More about this item

    Keywords

    Aggregate Price Stickiness; Intangible Capital; Returns to Scale;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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