The Data Economy: Tools and Applications

Isaac Baley; Laura L. Veldkamp

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The Data Economy

Tools and Applications

Isaac Baley and Laura L. Veldkamp

Language: English

Published/Copyright: 2025

About this book

Tools from macroeconomics and finance to incorporate the central role that data plays in the economy

The most valuable firms in the global economy are valued largely for their data. Amazon, Apple, Google, and others have proven the competitive advantage of a good data set. And yet despite the growing importance of data as a strategic asset, modern economic theory neglects its role. In this book, Isaac Baley and Laura Veldkamp draw on a range of theoretical frameworks at the research frontier in macroeconomics and finance to model and measure data economies. Starting from the premise that data is digitized information that facilitates prediction and reduces uncertainty, Baley and Veldkamp uncover the ways that firm-level data choices resonate throughout the broader macroeconomic and financial landscapes.

With The Data Economy, Baley and Veldkamp put forward a broad research agenda with a formal yet accessible approach, offering an analysis of the data economy and its welfare effects that will be of interest to practitioners, researchers, and graduate students. The tools presented, many of them information-related methods from macroeconomics and finance, are theoretical but introduced with careful attention to how they can inform or enable measurement. Applications include assessing the economic worth of data and unraveling its influence on the structure of production, inflation, and pricing dynamics; firm and investor behavior; advertising; market power; and asset pricing. Baley and Veldkamp bring readers to the cutting edge of this novel research area, equipping them to formulate their own theoretical advances and policy analysis.

Author / Editor information

Isaac Baley is associate professor of economics at Universitat Pompeu Fabra, associate researcher at the Centre de Recerca en Economia Internacional, and affiliated professor at the Barcelona School of Economics. He is a former economic advisor to the Mexican Ministries of Economics and Finance. Laura Veldkamp is the Cooperman Professor of Economics and Finance at Columbia University's Graduate School of Business. She is the author of Information Choice in Macroeconomics and Finance (Princeton), a former editor of the Journal of Economic Theory, and a member of the American Finance Association's board of directors.

Reviews

"Well organised and well written."---Lavan Mahadeva, The Society of Professional Economists

Topics

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Frontmatter
i

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CONTENTS
vii

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List of Figures
xv

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Acknowledgments
xvii

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1 The Data Economy
1

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2 Statistical Tools
16

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3 Data Sources
49

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4 Data-Driven Predictions and Aggregate Outcomes
70

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5 Using Data in Strategic Settings
90

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6 Using Data to Guide Investment
115

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7 Data and Market Power
143

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8 Data Markets and Data Platforms
172

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9 Data in Production and the Data Feedback Loop
188

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10 Data Measurement and Valuation
216

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11 Data Policy and Welfare
238

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Conclusion
264

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A Mathematical Appendix
267

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References
275

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Index
295

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Publishing information

Pages and Images/Illustrations in book

eBook published on:

February 5, 2025

eBook ISBN:

9780691256740

Pages and Images/Illustrations in book

https://doi.org/10.1515/9780691256740

eBook ISBN: 9780691256740

Keywords for this book

Firm; Price; Signal; Agents; Market; Asset; Customers; Variance; Investors; Product; Platform; Precision; Optimal; Noise; Production; Shocks; Variable; Capital; Prior; Payoffs; Economy; Forecast; Equilibrium; Goods; Function; Labor; Posterior; Linear; Economic; Vector; Marginal; Covariance; Quality; Output; Power; Financial; Technology; Zero; Law; Unit; Data firm; Stock; Probability; Knowledge; Rational; Consumers; Solution; Matrix; Portfolio; Distribution; Tools; Increase; Privacy; Component; Digital; Bayes; advertising; AI economics; Bayesian learning; Big data; Data; data assets; data competition; data feedback loop; data markets; data reagulation; Data revolution; digital assets; digital economics; e-capital

Audience(s) for this book

For a non-specialist adult audience

Princeton University Press

The Data Economy

Overview

About this book

Author / Editor information

Reviews

Topics

Table of contents

Frontmatter

CONTENTS

List of Figures

Acknowledgments

1 The Data Economy

2 Statistical Tools

3 Data Sources

4 Data-Driven Predictions and Aggregate Outcomes

5 Using Data in Strategic Settings

6 Using Data to Guide Investment

7 Data and Market Power

8 Data Markets and Data Platforms

9 Data in Production and the Data Feedback Loop

10 Data Measurement and Valuation

11 Data Policy and Welfare

Conclusion

A Mathematical Appendix

References

Index

Bibliographic data