A Generalized Model of Growth in the Data Economy

Abstract

In this paper, we develop a generalized model to describe the long-run effects of various types of data, ranging from consumption-generated to production-generated. Specifically, we introduce two new types of data, namely producer data and nature data, which are generated from the production process and nature, respectively. To utilize these data, labor is required to collect and clean them; however, we assume no privacy concerns as in previous studies that solely focused on consumer data. We examine the balanced growth path and find that the economy's growth rate is higher than that derived from the model using consumer data alone, a finding not reported in existing studies. Moreover, we extend our analysis to incorporate all types of data and present a comprehensive picture of the transformations of different growth regimes. Our framework has novel and crucial implications for the data economy.

Keywords: data economy, endogenous growth, generalized model, innovation

JEL Classification: O33, O38, O41