How does digitalization transform the macroeconomic production function? Within an endogenous technology choice framework, we find that sectors with more digital capital exhibit a higher elasticity of substitution between value-added and intermediate inputs and within value-added, between capital and labor. The shift in the elasticity of substitution is consistent with a higher complementarity of input-specific productivities. We also find that digitalization contributes to Hicks-neutral technical change in value added. Not all types of digital capital have a significant impact on the production function.
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Schwark et al. (2024) studied this question.