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Estimating the Ideas' Production Function Using Macro‐Economic Persistence

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  • XIAOHAN MA
  • ROBERTO SAMANIEGO

Abstract

If productivity stems from the accumulation of ideas, then the ideas' production function can cause productivity and macro‐economic aggregates to be persistent. We use this insight to estimate the parameters of the ideas' production function in a general equilibrium model. We find that ideas become harder to produce as they accumulate. We quantitatively explore the propagation of different kinds of shocks through the ideas' production function, finding that nonpersistent shocks that affect R&D decisions may lead to persistent productivity changes as a result. The use of capital in R&D is important for propagation.

Suggested Citation

  • Xiaohan Ma & Roberto Samaniego, 2026. "Estimating the Ideas' Production Function Using Macro‐Economic Persistence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 58(1), pages 111-139, February.
    • Handle: RePEc:wly:jmoncb:v:58:y:2026:i:1:p:111-139
    DOI: 10.1111/jmcb.13200
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