An assessment of how well we account for intangibles

Estimates of intangible capital stock are of prime importance for accurate measurement of productivity growth. Aggregate intangible capital stock is usually estimated using the so-called Corrado-Hulten-Sichel (CHS) new growth accounting framework. Yet this framework has not received much academic scrutiny to-date. This article proposes a validity test of two intangible investment series in the CHS framework, namely "brand equity" and "architectural and engineering designs." The test involves assessing the extent to which these intangible investment series explain the demand for trademarks and design rights. The econometric analysis is performed on an unbalanced panel of 32 countries from 1980 to 2010. The results suggest that brand equity investment is a powerful predictor of trademark applications. However, investment in design activity is not correlated with the count of design rights, which I take as evidence that current methodologies do not account well for design activities.