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Growth Facts with Intellectual Property Products: An Exploration of 31 OECD New National Accounts

Author

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  • Sangmin Aum
  • Dongya Koh
  • Raül Santaeulàlia-Llopis

Abstract

We document a rise of intellectual property products (IPP) captured by up-to-date national accounts in 31 OECD countries. These countries gradually adopt the new system of national accounts (SNA08) that capitalizes IPP -which was previously treated as an intermediate expense in the pre-SNA93 accounting framework. We examine how the capitalization of IPP affects stylzed growth facts and the big ratios (Kaldor, 1957, Jones, 2016). We find that the capitalization of IPP generates (a) a decline of the accounting labor share, (b) an increase in the capital-to-output ratio across time, and (c) an increase in the rate of return to capital across time. The key accounting assumption behind the IPP capitalization implemented by national accounts is that the share of IPP rents that are attributed to capital, ?, is equal to one. That is, national accounts assume that IPP rents are entirely owed to capital. We question this accounting assumption and apply an alternative split of IPP rents between capital and labor based on the cost structure of R&D as in Koh et al. (2018). We find that this alternative split generates a secularly trendless labor share, a constant capital-to-output ratio, and a constant rate of return across time. We discuss the implications of these new measures of IPP capital -conditional on ?- for cross-country income per capita differences using standard development and growth accounting exercises. Please see the abstract on the paper to see

Suggested Citation

  • Sangmin Aum & Dongya Koh & Raül Santaeulàlia-Llopis, 2018. "Growth Facts with Intellectual Property Products: An Exploration of 31 OECD New National Accounts," Working Papers 1029, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:1029
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    References listed on IDEAS

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    1. Francesco Caselli & Antonio Ciccone, 2019. "The Human Capital Stock: A Generalized Approach: Comment," American Economic Review, American Economic Association, vol. 109(3), pages 1155-1174, March.
    2. Ellen R. McGrattan & Edward C. Prescott, 2010. "Unmeasured Investment and the Puzzling US Boom in the 1990s," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(4), pages 88-123, October.
    3. Carol Corrado & Charles Hulten & Daniel Sichel, 2005. "Measuring Capital and Technology: An Expanded Framework," NBER Chapters,in: Measuring Capital in the New Economy, pages 11-46 National Bureau of Economic Research, Inc.
    4. Koh, Dongya; Santaeulàlia-Llopis, Raül; Zheng, Yu, 2015. "Labor share decline and intellectual property products capital," Economics Working Papers ECO2015/05, European University Institute.
    5. Brent Neiman, 2014. "The Global Decline of the Labor Share," The Quarterly Journal of Economics, Oxford University Press, vol. 129(1), pages 61-103.
    6. Ellen R. McGrattan & Edward C. Prescott, 2014. "A Reassessment of Real Business Cycle Theory," American Economic Review, American Economic Association, vol. 104(5), pages 177-182, May.
    7. repec:oup:qjecon:v:133:y:2018:i:2:p:665-700. is not listed on IDEAS
    8. Lutz Hendricks & Todd Schoellman, 2018. "Human Capital and Development Accounting: New Evidence from Wage Gains at Migration," The Quarterly Journal of Economics, Oxford University Press, vol. 133(2), pages 665-700.
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    More about this item

    Keywords

    growth facts; intellectual property products; labor share; cross-country income differences;

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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