## Relating the Knowledge Production Function to Total Factor Productivity: An Endogenous Growth Puzzle

_IMF Working Papers, April 1, 2005_

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## Bibliographic details
- Authors: Frederick L Joutz, Yasser Abdih
- Published: April 1, 2005
- Series: IMF Working Papers

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### Overview
- The knowledge production function is central to R&D-based growth models.
- This paper empirically investigates the knowledge production function and intertemporal spillover effects using cointegration techniques.
- Time-series evidence suggests there are two long-run cointegrating relationships:
  - The first captures a long-run knowledge production function.
  - The second captures a long-run positive relationship between TFP and the knowledge stock.
- Results indicate strong intertemporal knowledge spillovers and that the long-run impact of the knowledge stock on TFP is small.
- Evidence is interpreted in light of existing theoretical and empirical evidence on endogenous growth.

### Methods
- Empirical approach: cointegration techniques applied to time-series data.
- Vector autoregression is listed among the subject keywords, indicating its relevance to the empirical strategy.

### Key Findings and Statistics
- Two long-run cointegrating relationships identified:
  - Long-run knowledge production function.
  - Long-run positive relationship between TFP and the knowledge stock.
- Presence of strong intertemporal knowledge spillovers.
- The long-run impact of the knowledge stock on TFP is small.
- Subject classifications: Productivity, Spillovers, Stocks, Total factor productivity, Vector autoregression.
- Keywords: growth rate, production function, WP.

### Interpretation and Implications
- The empirical findings are discussed relative to existing theoretical and empirical evidence on endogenous growth.
- The small long-run effect of the knowledge stock on TFP, despite strong intertemporal spillovers, poses an endogenous growth puzzle that the paper highlights for further research and debate.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/relating-the-knowledge-production-function-to-total-factor-productivity-an-endogenous-growth-18129_