Public Data Provision and Quality Upgrade in a Semi-Endogenous Growth Model with R&D

We introduce public data into a semi-endogenous growth model with R&D to highlight the role of public data in raising productive efficiency. We study two settings. In the benchmark setting, we assume that the public data is provided free of charge to private firms. In the extended model, we allow the government to upgrade the quality and usefulness of its data, for instance, through a higher rate in conducting surveys and a speedier dissemination of fully desensitized data, at an additional cost to be recouped at a profit by selling the data to private firms at market price. In both settings, the government finances its expenditure using output taxes. We show that the representative consumer’s welfare is higher with public data quality upgrade than in the benchmark case through two channels. First, better public data raises firms’ productivity. Second, the profit generated from selling public data allows the government to reduce the tax rate, hence mitigating the tax distortion