Intangible Capital and International Income Differences
22 Pages Posted: 20 Nov 2007 Last revised: 3 Oct 2013
Date Written: June 17, 2008
I add intangible capital to a variant of the neoclassical growth model and study the implications for cross-country income differences. I calibrate the parameters associated with intangible capital by using new estimates of investment in intangibles by Corrado et al. (2006). When intangible capital is added to the model, the TFP elasticity of output increases from 2.14 to 2.64. This finding implies that the addition of intangible capital increases the ability of the neoclassical growth model to explain international income differences by more than a factor of two.
Keywords: International Income Differences, Intangible Capital
JEL Classification: O33, O41, O47
Suggested Citation: Suggested Citation