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Data processing growth model

Author

Listed:
  • Teemu Pekkarinen

    (University of Vaasa)

Abstract

This paper develops a growth model in which new ideas result from people processing data. By distinguishing between ideas and data, the model provides a transparent framework for studying how information technology affects economic growth. Information technology is decomposed into three components: data processing, data generation, and data retention. The model has two candidate balanced growth path regimes of per-capita output: (i) a path in which the long-run growth rate is governed by data-processing capacity, while changes in data generation and retention affect levels but not the growth rate; (ii) a path in which long-run growth is jointly determined by data-processing and data-retention capacities. Which balanced growth path the economy obtains depends on the strength of data-processing capacity. The central insight is that improvements in data generation or retention primarily expand data stocks and have limited implications for long-run growth unless accompanied by improvements in data-processing capacity.

Suggested Citation

  • Teemu Pekkarinen, 2026. "Data processing growth model," Economics Bulletin, AccessEcon, vol. 46(1), pages 334-341.
    • Handle: RePEc:ebl:ecbull:eb-26-00037
    as

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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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