KC Fed, Report: R&D Capital and the Idea Production Function

”Our results imply that ideas, rather than simply getting harder to find, in fact require more sophisticated lab equipment to be found (or implemented). This is a scarcity that can only be overcome by increased accumulation and development of R&D capital, not necessarily just by employing more R&D staff. Furthermore, because investments in R&D equipment are an endogenous variable that can be influenced by policy, our results suggest a weak case for future secular stagnation.”