Introduction MELF Equation Macro Metrics Micro Metrics Beyond GDP How To Access Acknowledgements About Us
New Economics
Business Innovation Economics
But let’s start with data. The new compilation is dubbed DINTEC™ (an acronym for Data on INnovation TEchnology and EConomics). From it a previously unknown equation called the Macroscopic Economic Lens Formula, or MELF (whose name is explained later) has been discovered. It incorporates new variables and works like this. Purchasers will pay more for higher performing products and services (described in Economics as having higher quality Q), while favoring a competitive duplicate C, offered at a lower price P. In symbols Q = G (P, C, I). For the first time, the cardinal quality of any product or service can be back-calculated from its price, a feat currently unthinkable using incumbent hedonic methods. The MELF is not a regression equation. Q is not an array of attributes (it’s a single variable). Competition C does not have to be, and is not, perfect. And exact algebra, more typical in Physics than Applied Economics connects Q, C and P for the DINTEC™ goods it’s been tested against, and this validates it for general use. The MELF goes on to provide an algebraic link from quality to GDP (because it relates a sum of qualities Sum:Q to a sum of prices Sum:P) and because of exactness, this leads to an unprecedented 100% determination of economic growth dominated by Quality. To fit labor and capital to GDP, current macroeconomics generates a residual called Total Factor Productivity, TFP, which is interpreted as a proxy for the impact of innovations on growth. But the MELF provides an exact fit. There is no residual. This breakthrough delivers a completely new understanding of the role of innovation in growth accounting.
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Download and study the Working Paper Commercial Knowledge on Innovation Economics HERE Read Q&A from an interview conducted by the Royal Economic Society HERE
MELF Equation