Using synthetic data generated by a prototypical stochastic growth model, we explore the quantitative extent of measurement error of the Solow residual (Solow 1957) as a measure of total factor productivity (TFP) growth when the capital stock is measured with error and when capacity utilization...

The two notes deal (from different angles) with the extension of the Solow model that has been offered by Mankiw, Romer and Weil (MRW). In this `extended Solow' model, physical capital enters the production function with the same weight as human capital and both weights are about 1/3. The first...

Pressure on public finances has increased scrutiny of public support for innovation. We examine two particular issues. First, there have been many recent calls for the (relatively new) UK R&D subsidy to be extended to other "research" activities, such as software. Second, argument still rages...

We (a) propose an implementable innovation index, (b) relate it to existing innovation definitions and (c) show whole-economy and industry-specific results for the UK market sector, 2000-2005. Our innovation measure starts by observing that we could get more GDP without innovation by simply...

The US has experienced a sustained increase in productivity growth since the mid-1990s, particularly in sectors that intensively use information technologies (IT). This has not occurred in Europe. If the US “productivity miracle” is due to a natural advantage of being located in the US then...

This paper looks at the channels through which intangible assets affect productivity. The econometric analysis exploits a new dataset on intangible investment (INTAN-Invest) in conjunction with EUKLEMS productivity estimates for 10 EU member states from 1998 to 2007. We find that (a) the...

We attempt to replicate for the UK the Corrado, Hulten and Sichel (2005, 2006) work on spending on intangible assets in the US. Their work suggests private sector expenditure (investment) on intangibles is about 13% (11%) of US GDP 1998-2000, with intangible investment about equal to tangible...

Over recent years `opportunity cost' (OC) models of growth have been constructed which suggest that firms take advantage of the possibility of intertemporal subsitution in order to engage in productivity-improving activities during recessions. This paper tests whether this argument is correct,...

This Paper shows how microeconomic data on investment plans can be used to study the structure of risk faced by firms. Revisions of investment plans form a martingale, and thus reveal the underlying shocks driving investment. We decompose revisions in investment plans into micro, sector and...

We examine the relationships between productivity growth, IT investment and organisational change (DO) using UK firm data. Consistent with the small number of other micro studies we find (a) IT appears to have high returns in a growth accounting sense when DO is omitted; when DO is included the IT...