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Title: Intangible capital and international income differences
Authors: Hashmi, A.R. 
Keywords: Barriers to Accumulation
Intangible Capital
Intermediate Goods
International Income Differences
Issue Date: Apr-2013
Citation: Hashmi, A.R. (2013-04). Intangible capital and international income differences. Macroeconomic Dynamics 17 (3) : 621-645. ScholarBank@NUS Repository.
Abstract: I add intangible capital to a variant of the neoclassical growth model that already features physical and human capital, and study the implications for international income differences. I calibrate the parameters associated with intangible capital by using new estimates of investment in intangibles by Corrado et al. [Review of Income and Wealth 55, 661-685 (2009)] and depreciation rates by Corrado and Hulten [American Economic Review 100, 99-104 (2010)]. I find that for a given efficiency difference between rich and poor countries, the model with intangible capital can explain more than double the income differences of the model without. Put another way, in the benchmark case, differences in intangible capital account for 14.3% of the observed income differences. I also examine the role played by intangible capital in versions of the model with barriers to accumulation. In all the variants that I consider, differences in intangible capital account for 10% to 22% of the observed income differences. Copyright © Cambridge University Press 2011.
Source Title: Macroeconomic Dynamics
ISSN: 13651005
DOI: 10.1017/S136510051100040X
Appears in Collections:Staff Publications

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