Template-Type: ReDIF-Paper 1.0 
Title: Are Ideas Really Getting Harder To Find? R&D Capital and the Idea Production Function
Author-Name: Jakub Growiec 
Author-Name: Peter McAdam 
Author-Name: Jakub Mućk 
Abstract: We supplement the 'Idea Production Function' (IPF) with measures of R&D capital. We construct a time series of R&D capital stock in the US (1968-2019) based on cumulated R&D investment. We estimate the IPF with patent applications as R&D output, allowing for a flexible treatment of unit productivity of R&D capital and R&D labor. We find that the elasticity of substitution between R&D input factors is 0.7-0.8 and significantly below unity. This implies that R&D capital is an essential factor in producing ideas, complementary to R&D labor. We also identify a systematic positive trend in R&D labor productivity at about 1% per year on average and a cyclical trend in R&D capital productivity. Our results suggest that instead of 'ideas getting harder to find', there is an increasing scarcity of R&D capital needed to find them.
Number: 2022-071
Length: 51 pages 
Creation-Date: 2022-02
Keywords: R&D, long-run growth, technical change, estimation, CES.
Classification-JEL: O30, O40, O47
File-URL: https://hdl.handle.net/20.500.12182/1128
File-Format: Application/pdf
DOI: 10.33119/kaewps2022071
Handle: RePEc:sgh:kaewps:2022071